Social security benefits: tax exemption

The Income Tax (Exemption of Social Security Benefits) Regulations, SI 2021/1341 exempt the following four new social security payments from tax, retrospectively from the dates they were introduced:

• winter heating assistance (WHA) (Scotland) from November 2020;
• short term assistance (STA) (Scotland) from July 2021;
• covid winter grant scheme (CWGS) (England, but the exemption extends to equivalent regimes established in the devolved administrations), from December 2020 until April 2021; and
• covid local support grant (CLSG) (England, but the exemption extends to equivalent regimes established in the devolved administrations) from April 2021 until September 2021.

The regulations amend ITEPA 2003 s 677 (UK social security benefits wholly exempt from tax) to provide that no liability to income tax arises on these benefit payments. This is the first use of the power in FA 2021 s 13 which allows the Treasury to exempt social security payments from income tax with retrospective effect.