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Coronavirus: Tax Credits - The Basics
Tax Credits - The Basics

Who gets Tax Credits?

Working Tax Credit
is for working claimants: it is provided to boost the income of working people who are on a low income. Entitlement is, amongst other things, dependent upon hours worked.

Child Tax Credit is money paid to people responsible for children.

When someone has a change in their circumstances, depending on what that change is, they may be able to stay on Working and/or Child Tax Credit.

It is no longer possible to make a new claim for Tax Credits, unless the claimant is protected by the SDP Gateway Condition. So, if someone is not already receiving Working Tax Credit or Child Tax Credit, they would probably need to claim Universal Credit instead. (If someone is on one of the Tax Credits they can still make a claim for the other one as this doesn't count as a new claim).

If someone makes a claim for Universal Credit, their Tax Credits will be brought to an end straight away.

A very useful and extensive guide to Tax Credits, including links to leaflets, can be found on www.revenuebenefits.org.uk

What if someone is laid off or has their hours reduced?

How someone’s Tax Credits are affected during the Coronavirus pandemic will depend on several factors, eg:

  • If the claimant is self-isolating or sick, or 
  • If they are still employed/self employed or their job has ended
  • How long this will last
  • If they are claiming other benefits

HMRC has announced that people temporarily working reduced (or no) hours due to coronavirus, or who are being furloughed, will not see a change in their Tax Credit payments - so long as they are still employed or self-employed - as they will be treated as working their normal hours until the Job Retention Scheme and Self-Employment Income Support Scheme close, even if they are not using either scheme. They do not need to contact HMRC about this change. . 


Some people will be better off if they can remain on Tax Credits, whereas others might be better off if they claim UC instead. 

But once someone claims UC, there is no going back to Tax Credits, so it is best to seek advice from a specialist benefits adviser before doing anything.

See the other pages in this section for more information.

Sick or self-isolating?

Entitlement to Working Tax Credit depends on the claimant normally working a certain number of hours – see below.

However, when the claimant is off work sick, WTC can normally continue for up to 28 weeks. Claimants are still classed as working their normal hours if:

  • They are getting Statutory Sick Pay from their employer
  • They are getting New Style ESA
  • They are getting National Insurance credits because they have a limited capability for work
  • They are self-employed but, had they been an employee, they would be entitled to SSP or NS-ESA.
Hours Rules
Working Tax Credit – Required Hours*

Lone Parents

Lone parents aged 16 or over with at least one dependent child, working 16 hours or more a week.

Couples with children: 

  • Couples aged 16 or over with at least one dependent child, and 
  • One of a couple is working 24 hours or more a week, or 
  • Both are working a total of 24 hours or more a week as long as one of them is working 16 hours or more a week, or
  • One of the couple is working 16 hours or more a week, and the other is 'incapacitated', in hospital or in prison, or
  • At least one of the couple are working 16 hours or more a week, and either of them are entitled to Carer's Allowance.

Disabled Worker:
Couples aged 16 or over, where one (or both) is classed as a 'disabled worker' and that person works 16 hours or more a week, or 
Single people aged 16 or over who are classed as a 'disabled worker', who work 16 hours or more a week. 
To check whether a person counts as a 'disabled worker' use this factsheet from HMRC.

Age 60 plus: 
Couples, where one is aged 60 or over working 16 hours or more a week, or 
Single person aged 60 or over, working 16 hours or more a week.

Others:
Single people aged 25 or over, who are working 30 hours or more a week, or 
Couples where at least one is aged 25 or over, and working 30 hours or more a week. 

*Claimants will be treated as working their normal hours while the Job Retention Scheme and SEISS scheme are in place - even if the claimant isn't under one of these schemes. They must continue to be employed or self-employed. See above.


Frequently Asked Questions

I’m self-isolating so can’t go into work – I’ve let my employer know. I get Working Tax Credit – will this continue whilst I’m off work?

Whilst you are self-isolating you can receiving Statutory Sick Pay or ‘New-Style’ Employment and Support Allowance, and you are then treated as still working your normal hours whilst you are receiving these benefits for up to a maximum of 28 weeks. So your Working Tax Credit is unaffected.
And while the Job Retention scheme and Self Employed Income Support Scheme continue, so long as you remain employed, HMRC will use your normal hours anyway so you'll contin ue with your normal tax Credits.


I work at a cafe that is only doing take-outs now so my hours have dropped to 10 hours a week - does this mean my Working Tax Credit ends?

Normally this would trigger an end to Working Tax Credit, but while the Job Retention scheme and Self Employed Income Support Scheme continue, so long as you remain employed and this is just a temporary situation, HMRC will use your normal hours anyway so you'll continue with your normal Tax Credits. It doesn't matter that you aren't on the Job Retention Scheme.

 

I’m a single parent with two children. I’m a self-employed delivery driver. I currently get Working Tax Credit, Child Tax and a small amount of Housing Benefit.

My income has increased. What should I do?

You should notify both HMRC and the HB Office. It is likely that your Tax Credit award will reduce and your HB award could stop altogether.

Should your income drop again in the future, then let HMRC know and they may be able to reassess your award. But you will not be able to make a new claim for Housing Benefit, so at that point you may be better claiming Universal Credit – but get advice first.

 

 

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