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Clarification of income tax exemptions

New social security payment in Scotland

The Government will legislate in Spring 2022 to ensure that the new Adult Disability Payment made by the Scottish Government will be exempt from income tax (as agreed in the 2016 Fiscal Framework Agreement). The legislation will be retrospective from 1 March 2022.

HM Revenue and Customs will not collect any tax that may have been due on payments made from 1 March 2022 to the date the legislation takes effect.

This is being announced outside of the normal fiscal event process in order to ensure that those making the payments and the recipients know that they do not have to pay any tax on the payments.

Discretionary Fund payments

The Government will legislate in Spring 2022 to clarify that payments made through the Discretionary Fund (and the equivalent in the Devolved Administrations) will be exempt from income tax. The Discretionary Fund is a £144 million fund that forms part of the package of support to help households with rising energy bills. Local Authorities will use the fund to help households who are not eligible for a Council Tax Rebate. Council Tax Rebates are not subject to income tax.

HM Revenue and Customs will not collect any tax that may have been due on payments made from 1 April 2022 to the date the legislation takes effect.

This is being announced outside of the normal fiscal event process in order to ensure that those making the payments and the recipients understand income tax is not due on the payments.