Legislation will be introduced in Finance Bill 2021-22 that will grant HM Treasury the power to make regulations, under ministerial direction, in the event of a disaster or emergency of national significance.

Examples of where these could impact include:

• exempting benefits in kind of a specified description from income tax where appropriate
• changing the qualifying conditions for exemptions on benefits in kind
• exempting specified reimbursements from the charge to income tax
• providing relief for specified expenses.

HM Treasury can determine when it is appropriate to use the powers, but may only make temporary modifications to Parts 3, 4 and 5 ITEPA 2003 (which includes the power to make consequential modifications to the Income Tax Acts).

Any modifications made in exercise of the new powers would have effect only for a limited period of time as set out in any regulations made under the new powers. In any event, any modifications must cease to have effect at the end of the tax year after the year in which they first have effect (and will therefore only remain in place for a maximum of two complete tax years). 

However, the new powers may be exercised to make similar provision, if necessary, to extend any relieving measures for the taxpayer for a further period of time during which an emergency or disaster is having an impact, or in relation to a new disaster or emergency.

The power can only be exercised in a way that is wholly relieving to the taxpayer and cannot be used to create a tax charge.