Homes for Ukraine Scheme: Tax Exemptions for Sponsorship Payments

The Government have already announced that sponsorship payments under the Homes for Ukraine scheme will be tax-free and are today setting out more information on how we will legislate to ensure this is the case.

The Government intend to legislate within Finance Bill 2022-23 to ensure that the Homes for Ukraine sponsorship payment, made by Local Authorities to sponsors under the Homes for Ukraine Scheme, will be exempt from income tax and corporation tax. The legislation will be retrospective with effect from the date the first payments to sponsors will be made. The payment will not be chargeable to national insurance contributions.

The Government have also introduced legislation to disregard payments made under the Homes for Ukraine Scheme when calculating income for the purposes of tax credits.

HM Revenue and Customs will not collect any tax that may have been due on payments made from the date the first payments to sponsors will be made to the date the legislation takes overriding effect.

As the payments will be treated as non-taxable income, any expenses that could otherwise have been offset against taxable income will not be allowable as a tax deduction (e.g. expenses incurred by landlords in relation to the property).

The Government intend to legislate within Finance Bill 2022-23 so that those companies that currently qualify for the existing reliefs available from the annual tax on enveloped dwellings (ATED) and the 15% rate of stamp duty land tax (SDLT) for dwellings used in a property development or property trading business or let on a commercial basis will continue to be able to claim the relief while the dwellings are being used under the Homes for Ukraine Scheme.

Where a company purchases a property for a purpose that would otherwise be relievable from the 15% rate of SDLT, relief will continue to be available if the property is to be temporarily used under the Homes for Ukraine Scheme.

Where a dwelling does not currently qualify for relief from ATED, before the property is included in the Homes for Ukraine Scheme, ATED relief will be available from the point of occupation where the entire dwelling is used under the Homes for Ukraine Scheme.

The legislation will have effect from 1 April 2022 for ATED and from the date of this statement for the 15% rate of SDLT. From those dates and to the date the legislation takes overriding effect, HM Revenue and Customs will not collect any ATED or SDLT that may have been due following a change in the use of the dwelling to be part of the Homes for Ukraine Scheme.

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