Exemption from income tax and corporation tax on payments made to sponsors

Who is likely to be affected

Individuals, communities, the voluntary sector and organisations, such as businesses, charities and religious groups, who receive appreciation payments under the Homes for Ukraine program.

General description of the measure

This measure introduces an income and corporation tax exemption for thank-you payments made by local authorities to sponsors under the Homes for Ukraine programme.

Political objective

The purpose of this measure is to confirm that the appreciation payments made by local authorities to sponsors under the Homes for Ukraine program are exempt from income tax and corporation tax.

Context of the measure

In March 2022, the government announced the Homes for Ukraine scheme, a humanitarian sponsorship visa scheme allowing individuals, charities, community groups and businesses from the UK to sponsor Ukrainians arriving in the UK.

Under this scheme, sponsors receive a monthly sum of £350 (capped at 12 months) as a thank you for housing an individual or family. Without specific legislation, these thank you payments could be subject to tax.

In a written ministerial statement dated March 31, 2022, the government confirmed that legislation would be introduced in the Finance Bill 2022-23 to exempt payments from income tax and corporation tax.

Detailed proposal

Effective date

This measure is totally exonerating with retroactive effect. The exemption from income tax and corporation tax will take effect from March 14, 2022, the date of the launch of the Homes for Ukraine program.

Current law

Thank you payments made to individuals or unincorporated entities under the Homes for Ukraine program may be subject to income tax under Chapters 2 and 3, Part 3 of the 2005 Income Tax (Trade and Other Income) or Chapter 8 Part 5 Tax (Trade and Other Income) Act 2005.

Payments made to incorporated businesses may be subject to corporation tax under Chapter 2 Part 2 of the Corporation Tax Act 2009, Chapter 3 Part 4 of the 2009 Corporation Tax or Chapter 8 Part 10 of the Corporation Tax Act 2009.

Proposed revisions

Legislation will be introduced in the Finance Bill 2022-23 to exempt from income tax and corporation tax thank-you payments made by local authorities to sponsors under the Homes for Ukraine program .

Summary of impacts

Treasury impact (£million)

2022 to 2023 2023 to 2024 2024 to 2025 2025 to 2026 2026 to 2027 2027 to 2028
Empty Empty Empty Empty Empty Empty

The final cost will be subject to careful review by the Office of Budget Responsibility and will be defined at the next tax event.

Economic impact

This measure is not expected to have significant macroeconomic implications.

Impact on individuals, households and families

This measure should have a positive impact on people who receive thank you payments under the Homes for Ukraine program. This measure will ensure that they do not pay income tax on these payments.

The customer experience is expected to remain broadly the same as this measure does not change the way individuals interact with HMRC.

The measure should not affect the formation, stability or breakdown of the family.

Equalities impacts

This measure will have a positive impact, reflecting the population receiving the tax-free thank you payments.

Impact on businesses, including civil society organizations

This measure should have a positive impact on companies that receive the thank you payments under the Homes for Ukraine program. This measure will ensure that they do not pay income tax or corporation tax on these payments. One-time costs could include familiarization with this change. There should be no ongoing costs.

This measure is expected to have a positive impact on civil society organizations that receive the appreciation payment under the Homes for Ukraine program. This measure will ensure that they do not pay income tax or corporation tax on these payments. One-time costs could include familiarization with this change. There should be no ongoing costs.

The customer experience should remain broadly the same as it does not change the way businesses interact with HMRC.

Operational impact (£million) (HMRC or other)

The implementation of this measure has no operational impact on HMRC.

Other effects

Other impacts were taken into account and none were identified.

Monitoring and evaluation

The measure will be kept under review through regular communication with the Housing and Community Improvement Department.

Additional tips

If you have any questions about this change, email: [email protected]

Luisa D. Fuller