Citation, commencement and interpretation

1.—(1) These Regulations may be cited as the Income Tax (Exemption of Social Security Benefits) Regulations 2022 and come into force on 1st June 2022.

(2) In these Regulations, “ ITEPA” means the Income Tax (Earnings and Pensions) Act 2003( 2).

Amendments to the Income Tax (Earnings and Pensions) Act 2003

2.  In section 677(1) of ITEPA( 3), in Part 1 of Table B (UK social security benefits wholly exempt from tax: Table B: benefits payable under primary legislation etc) at the appropriate place insert—

3.  The amendment made by regulation 2 has effect for the tax year 2021-22 and subsequent tax years.

Modifications to the Income Tax (Earnings and Pensions) Act 2003

4.  ITEPA is modified as follows.

5.  Section 677 has effect as if—

(a) in subsection (1), in Part 1 of Table B—

(i) at the appropriate place there were inserted—

(ii) at the appropriate place there were inserted—

(b) after subsection (3), there were inserted—

“(4)  In this section—

(a) “ the Council Tax Rebate Discretionary Fund ” means the grant that was the subject of guidance published by the Department for Levelling up, Housing and Communities on 23 February 2022 (and as updated from time to time).

(b) “ the Household Support Fund Grant ” means any grant paid under the Household Support Fund Grant Determination No 31/5787 and subsequent determinations made under section 31 of LGA 2003 to provide support of a similar nature.

(5)  References in this section to payments made pursuant to any scheme or grant in Scotland, Wales or Northern Ireland corresponding to any scheme or grant defined in subparagraphs (a) and (b) of section 4 are references only to payments made pursuant to such a scheme or grant for the tax year 2021-22 and subsequent tax years. ”.

6.  In Schedule 1 to ITEPA, the Table in Part 1(abbreviations of Acts and instruments), has effect as if at the appropriate place there were inserted—

7.  The modifications made by regulation 5(a)(i) and (so far as relating to regulation 5(a)(i)) regulations 5(b) and 6 have effect for the tax year 2021-22 and subsequent tax years.

8.  The modifications made by regulations 5(a)(ii) and (so far as relating to regulation 5(a)(ii)) regulations 5(b) and 6 have effect for the tax year 2020-21 and subsequent tax years.

EXPLANATORY NOTE

(This note is not part of the Regulations)

The Regulations amend Chapter 5 of Part 10 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1)(“ ITEPA”), so as to provide that no liability to income tax arises on social security benefits and payments made by local authorities of a description specified in the regulations.

These Regulations are made in exercise of the power in section 13(1) and 13(2)(b), (c) and (d) of the Finance Act 2020 (c. 14)(“FA 2020”). Section 13(2)(b) provides that regulations made under section 13(1) of that Act may be applied retrospectively.

Regulation 2 amends section 677 of ITEPA by inserting a new row into Part 2 of Table B, in order to wholly exempt Scottish Adult Disability Payment (“ ADP”) from income tax.

Regulation 3 provides that the amendment made by regulation 2, in respect of ADP, has effect for the 2021-22 tax year and subsequent tax years.

Regulations 4, and 5, which are also made under section 13(1) and (2) of FA 2020, and, in exercise of the specific power in section 13(2)(b) of FA 2020, modify the effect of section 677 of ITEPA, so that the following will be wholly exempt from income tax—

• payments made pursuant to the Council Tax Rebate Discretionary Fund;

• payments made pursuant to any scheme or grant in Scotland, Wales or Northern Ireland corresponding to the Council Tax Rebate Discretionary Fund;

• payments made pursuant to the Household Support Fund Grant and corresponding grants; and

• payments made pursuant to any scheme or grant in Scotland, Wales or Northern Ireland corresponding to the Household Support Fund Grant.

Regulation 6 makes consequential modification to the Table in Part 1 of Schedule 1 to ITEPA, so that the Table has effect as if an abbreviation for the Local Government Act 2003 (c. 26)(“LGA 2003”) were inserted into it.

Regulations 7 and 8 set out the tax years the modification made by regulations 4 to 6 have effect for.

A Tax Information and Impact Note has not been prepared for this instrument as it contains no substantive changes to tax policy.