By way of background, the Homes for Ukraine scheme allows individuals, charities, community groups and businesses in the UK to bring Ukranians to the UK and provide accommodation for them.
The government is offering a sponsorship payment of £350 per month for those accommodating Ukranian refugees under the scheme. As accommodation must be provided rent-free, the payment is intended to recognise that there will be costs associated with providing it.
Tax relief
On 31 March, the government announced in a Written Ministerial Statement that it will legislate, in Finance Bill 2022-23, to ensure that sponsorship payments made under the scheme will be exempt from income tax and corporation tax, and that the payment will not be subject to National Insurance Contributions.
The legislation will be retrospective with effect from the date the first payments to sponsors are made and HMRC will not collect any tax that may have been due before the legislation takes effect.
Landlords
Landlords receiving sponsorship payments should note that, as the payments will be treated as non-taxable income, any related expenses will not be allowable as tax deductions.
Companies
Legislation will also be included in Finance Bill 2022-23 to deal with companies that currently qualify for the existing reliefs from the Annual Tax on Enveloped Dwellings and the 15% rate of Stamp Duty Land Tax for dwellings used in a property development business, used in a property trading business, or let on a commercial basis.
These companies will continue to qualify for the relevant reliefs while the properties are being used under the Homes for Ukraine scheme.
Furnished Holiday Lets
The government has not yet addressed the potential impact on the availability of the special tax regime for Furnished Holiday Lets (“FHLs”), of making a property available under the Homes for Ukraine scheme.
However, a recent response provided to a parliamentary question on this subject suggests that there are no plans to make any adjustment to the FHL rules.
Please get in touch with your usual Ryecroft Glenton contact on 0191 281 1292 if you would like to discuss any of the above in further detail.
Photo by Hannah Busing on Unsplash