Homes for Ukraine payments confirmed as tax free

Homes for Ukraine sponsorship payments are to be exempt from income tax, corporation tax and National Insurance contributions, the Government has announced.

But because the payments will be treated as non-taxable income, landlords will be unable to claim tax deductions for related expenditure.

The Institute of Chartered Accountants in England and Wales has told its members that legislation to this effect will be retrospective and the Inland Revenue will not collect tax on payments received before the legislation reaches the statute book.

Residential properties acquired for more than £500,000 by companies and other ‘non-natural persons’ currently attract 15 per cent stamp duty – SDLT. But reliefs are available for this and also for the annual tax on ‘Enveloped Dwellings’. 

Companies that currently qualify for such reliefs will continue to do so while the dwellings are being used under the Homes for Ukraine scheme, and where relief had been claimed on the basis that:

  • the dwelling is used in a property development business;
  • the dwelling is used in a property trading business; or
  • it is let on a commercial basis.

Companies acquiring property that would otherwise qualify for relief from the 15 per cent SDLT rate, can claim relief if the property is to be temporarily used under the Homes for Ukraine scheme.