Explanatory note

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.