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Homes for Ukraine: £350 'thank you' payments

Published on 25 April 2022

On 18 March 2022, the government launched the ‘Homes for Ukraine’ scheme. Under the scheme, those who accommodate refugees of the conflict in Ukraine are given a monthly ‘thank you’ payment of £350. We explore what this means for taxpayers and benefit claimants.

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What is the Homes for Ukraine Scheme?

The Homes for Ukraine scheme is a way for certain Ukrainian nationals fleeing the conflict in their home country to apply for a visa in the UK. As part of the application, they must name a sponsor who is willing to provide rent-free accommodation for a minimum of six months.

If you wish to be a sponsor but you have not yet agreed who you will be a sponsor for, you can register your interest.

In return for providing accommodation under the scheme, the sponsor is paid £350 per month (via their local authority) as a ‘thank you’ payment for up to 12 months. The payment is per residential address, so it will not be affected by how many refugees are hosted at a single property.

There is a list of frequently asked questions on GOV.UK if you would like to read more about how the scheme works.

Is the ‘thank you’ payment taxable?

The government has confirmed that the payment is not ‘rent’, and no tax or National Insurance contributions (NICs) will be due on the £350 payments. The government has said they will be bringing in new law confirming this and it will apply to all £350 payments made under the Homes for Ukraine scheme.

This means:

  • The payment should not be included on your Self Assessment tax return (if you do one) and should not be counted as part of your taxable income.
     
  • If you receive any other property income you do not need to add the £350 Homes for Ukraine payments to that income. Other property income includes money from renting out another room in your home or another property you own, for example. If you do have property income and rely on reliefs such as the property allowance or rent-a-room relief, your ability to use these will not be affected by the £350 thank you payments.
     
  • You will not be able to claim tax relief for any expenses incurred in relation to hosting refugees under the scheme.

Can I charge rent on top of the £350 thank you payments?

The government have stated that if you wish to take part in the Homes for Ukraine scheme then you should not charge rent to any refugees who stay with you as part of the scheme.

For example, if you are a landlord and have an empty three-bedroom property that you wish to make available under Homes for Ukraine, then provided you only receive the £350 monthly payment under the scheme, that payment is tax free.

However, if you charge a ‘top up’ payment directly to the refugee, to bring to total amount received up to the market rent of the property, then you would no longer qualify under the scheme.

In this situation, the £350 thank you payment would stop and any income received directly from Ukrainian refugee would be taxable on you as property income.

Can my guest reimburse me for expenses?

Under the Homes for Ukraine scheme, you are not expected to provide meals or meet living expenses, but you may choose to do so. If your Ukrainian guest reimburses you for the cost of food or other expenses, then this will not be taxable on you.

You may also ask your guest to reimburse you for a reasonable share of utility bills, though see the information below about council tax.

Will the payments affect my council tax?

Ukrainian refugees who are in the UK under the Homes for Ukraine scheme are disregarded for the purposes of council tax discounts.

If you live alone and claim a single person discount for council tax purposes, you can continue to claim this discount if you host one or more refugees under the Homes for Ukraine scheme.

If you own an empty property then you may be eligible for a discount on the council tax bill for that property. If you allow a Ukrainian refugee to occupy the property under the Homes for Ukraine scheme, then this discount would not be affected.

If you own a property which is exempt from council tax, then hosting a Ukrainian refugee in that property should not affect that exemption.

If you receive a reduction in your council tax bill because of the level of your income, your local council will not be able to disregard the £350 payments as additional income as there are rules in place that cannot be changed part way through the billing period. However, the government is encouraging local councils to still provide discretionary discounts in these circumstances. If you are in this situation, you should confirm the position with your local council.

Will the payments impact my benefits?

If you are receiving benefits, payments of the £350 will not be counted as income for the purposes of calculating benefit entitlement.

The payments will be disregarded as capital for 12 months for universal credit. For other benefits that have capital limits, you should check with the department who pays the benefit.

What happens after the first 12 months?

The £350 thank you payments will only be paid under the scheme for 12 months. After this, you may decide to continue to offer accommodation to your Ukrainian guests. If they then begin to pay you directly for continued accommodation, these payments will be treated as property income and will be taxable. The payments will also be income for the purposes of means-tested benefits if you receive them.

To be clear, it is only the £350 thank you payments received under the Homes for Ukraine scheme that are tax free and do not affect means-tested benefits. Any payment received directly from Ukrainian refugees for accommodation will be taxable as property income.

Reliefs such as rent-a-room relief or the property allowance may be available against taxable property income.

Will Ukrainian refugees be able to access welfare benefits in the UK?

Yes, the government has confirmed that Ukrainian refugees will have access to the full range of welfare support as soon as they arrive in the UK.

Contact: Antonia Stokes (click here to Contact Us)
First published: 25/04/22

 

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