HomeTaxHomes for Ukraine payments to be non-taxable

Homes for Ukraine payments to be non-taxable

The government has pledged that the Homes for Ukraine Sponsorship Payment, available to people who open their homes to Ukrainian refugees, will be exempt from income tax and corporation tax – nor will the monthly £350 ‘thank you’ payment from the government be chargeable to national insurance contributions (NIC).

The scheme means individuals, charities, groups and organisations can provide Ukrainians fleeing from the Russian invasion with free accommodation in the UK. Under the initiative, the government offers an optional £350 per month to ‘sponsors’ who are accommodating Ukrainian refugees. 

The payment will be made by local authorities to sponsors under the Homes for Ukraine Scheme. Last month, the Financial Secretary to the Treasury announced that these payments will not be taxable. However, as the payments will be treated as non-taxable income, landlords will be unable to claim a tax deduction for related expenditure.

The Treasury’s Lucy Frazer also revealed that the legislation will be retrospective with effect from the date the first payments to sponsors are made. Additionally, HMRC will not collect any tax that may have been due before the legislation takes effect, the Financial Secretary to the Treasury explained:

“The Government has 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).”

A government statement confirms that legislation has been introduced to ensure that the payments will be disregarded for the purposes of calculating tax credits. The Homes for Ukraine scheme: frequently asked questions webpage also indicates that the payments will not affect benefit entitlement or council tax discounts.

According to The Telegraph, almost 65,000 refugees have applied for UK visas under the Homes for Ukraine scheme and the Ukraine Family Scheme, which allows Ukrainians with family in Britain to relocate to the UK.

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