This Briefing Paper provides a general introduction to council tax, a tax levied on domestic properties in England, Scotland and Wales. It explains what council tax is, who has to pay it, how council tax is calculated and set, and whether any exemptions or discounts may be available.
The Homes for Ukraine Scheme allows citizens, charities and community groups to host Ukrainian refugees in their homes, or other properties. Sponsors are asked to provide housing rent-free for a minimum of six months and will receive an optional monthly stipend of £350.
Will hosting a Ukrainian refugee affect my council tax?
The council tax system classes refugees and foreign nationals as liable for council tax: they do not receive any automatic exemptions.
This could mean that, for example, where a single person hosted a Ukrainian refugee, they could lose their single person discount on their council tax bill. Another scenario could be where a Ukrainian family was housed in an annexe that was unoccupied: there would then be council tax to pay on the annexe, when previously it would have been exempt.
The Government addressed the issue of single person discounts in a Parliamentary Question answered on 18 March. Stephen Morgan (Labour) asked the Secretary of State for Levelling Up, Housing and Communities, if taking part in the Homes for Ukraine Scheme prevented those eligible to claim the single person discount. For the Government, Eddie Hughes said: “The Government is clear that the entitlement to the council tax single person discount should not be impacted by an individual’s participation in the Homes for Ukraine scheme.”
However, in response to feedback from local authorities, the Government then issued further guidance on 1 April 2022 via Council Tax Information Letter 8/2022. This indicated the Government would pass new regulations to ensure that housing Ukrainian refugees would not affect council tax.
The new council tax regulations
The Council Tax (Discount Disregards and Exempt Dwellings) (Amendment) (England) Regulations 2022 came into force on 12 April 2022. They do two things:
- When counting the number of liable individuals in a property, “relevant Ukrainian persons” are eligible for a “discount disregard”. This means the council tax system does not take account of them when calculating how many people are resident in the property. This provision means that, if the property’s resident gets a single person discount, it will be unaffected. The council tax system already treats other groups in this way, such as students and people who are severely mentally impaired.
- The council tax system must disregard “relevant Ukrainian persons” when assessing whether particular properties are exempt from council tax. This provision covers exemption classes B, D, E, F, H, I, J, K, L, M, N, Q, S, T and U (see appendix 2 of the Library briefing paper Council Tax: FAQs page 28, for the definitions of these exemption classes). However, the situation for annexes is different – see below.
The regulations define a “relevant Ukrainian person” as “a person who holds permission to enter or to stay in the United Kingdom granted under the Homes for Ukraine Sponsorship Scheme route in Appendix Ukraine Scheme of the Immigration Rules”.
What about second homes?
The regulations aren’t explicitly designed to give discounts to second homeowners but there is a side-effect that could cause a 50% reduction.
If a second home, or an annexe to a main property, was occupied by a Ukrainian family, the new regulations provide that all the adults in the family receive discount disregards. This would mean the property is occupied but there are no adults liable for council tax.
In this scenario, only 50% of the standard council tax bill is due. This is because there are no liable adults, but the property is not exempt from council tax. On the other hand, billing authorities (district and unitary councils) are not required to give any council tax discounts on unoccupied second homes. A second home might therefore have been attracting a full council tax bill before being occupied by a Ukrainian family.
However, in this scenario, the Ukrainian refugees – not the second homeowners – would be liable in law for the council tax payments (the 50%). Council tax is normally payable by the occupants of a property.
Council tax support
Those offering accommodation through the Homes for Ukraine Scheme can also receive a £350 per month payment from the UK Government. This payment could affect their entitlements to reductions in council tax under local council tax support schemes, as it would amount to additional household income. Billing authorities cannot disregard these payments, as they are not permitted to change the parameters of support schemes within the financial year (2022/23).
The Government is therefore encouraging local authorities to give discretionary discounts to participants in this type of situation. The Government has reissued the Collection Fund Directions to billing authorities, which state that where such a discount is provided, the billing authority does not need to make a payment into the Council Tax collection fund. This should ensure that billing authorities do not lose out if they grant discretionary discounts of this kind.
The Department for Levelling Up, Housing, and Communities (DLUHC) has published an FAQs page on the Homes for Ukraine scheme.
About the author: Mark Sandford is a researcher at the House of Commons Library, specialising in local government and devolution in England.
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