Offsetting reductions in council tax support in England as a result of sponsoring people under the Homes for Ukraine scheme

New directions issued by Department for Levelling Up, Housing and Communities

New directions have been issued by the Department for Levelling Up, Housing and Communities  (DLUHC) in relation to reductions in local council tax support (LCTS)  in England awarded to sponsors participating in the Homes for Ukraine scheme.

Further to the DLUHC advising that the Local Government Finance Act 1992 (the 1992 Act) does not permit in-year changes to LCTS schemes - which means that it is not possible to legislate to prevent potential reductions in a Homes for Ukraine sponsor’s LCTS in 2022/2023 as a result of receiving the £350 monthly 'thank you' payment and any potential non-dependant deductions - the Department has advised that -

‘To protect the LCTS reduction of the sponsor household during 2022/2023 the government will encourage billing authorities to offset any Homes for Ukraine related changes in LCTS through discretionary discounts made under section 13A(1)(c) of the 1992 Act.’

To facilitate the use of discretionary payments by local authorities, the DLUHC advises that -

‘… the 2013 Directions are being revoked and replaced. The new Directions specify that where a discount is provided to offset an increase in council tax liability during 2022/2023 resulting from a Homes for Ukraine thank you payment or a guest-related non dependant deduction, the billing authority need not make a payment into the collection fund.

The net impact of this measure will be that billing authorities and major preceptors will receive the same amount of income as if there had been no Homes for Ukraine-related impact on the LCTS claim during 2022/2023.’

NB - in Council Tax Information Letter 9/2022, dated 11 April 2022, DHLUC confirms that changes made by the Directions and SI.No.439/2022 ensure that the Homes for Ukraine Scheme does not affect a sponsor’s council tax status.

For more information, see, The Collection Fund (Council Tax Reductions) (England) Directions 2022 from gov,uk