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Coronavirus: Tax Credits - Unpaid Leave
Tax Credits - Unpaid Leave
Many workers are on unpaid leave with their employer unwilling to 'furlough' them under the Job Retention Scheme. This seems to be where the employer has work for the employee to do, but the employee is unable to undertake that work.
Whether the employee can in fact be 'furloughed' or should be receiving some pay is all down to employment law and they should be advised to take advice on this..

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

Where someone is on unpaid leave then normally......

Where the drop in hours is going to be less than 4 weeks, then WTC can continue.

Where the drop in hours is going to be more than 4 weeks then WTC will end after that 4 week period - due to the 4 week run-on.

However.....

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.

This is a temporary measure to ease the pressure on the number of new UC claims and to make things easier for everybody.

What about paying the rent?

Anyone who already gets some Housing Benefit should let the HB Office know about the drop in income, as their HB should increase due to the drop in earnings.

Tax Credit claimants who are not already on Housing Benefit will not be able to make a new claim for HB. Instead, if someone is struggling to pay their rent, they might think about Universal Credit. But note that once on UC, Tax Credits will end. Some people are worse off financially on UC. So, they should speak to a benefits adviser to get a better off calculation. 

If the time off work is just a couple of weeks, it might not be worth swapping to UC. But if the period is longer – they will need to work out what is the best option for their particular circumstances. It is best to seek specialist benefits advice.

Child Tax Credit

Entitlement to Child Tax Credit does not depend on a claimant's hours of work, so any Child Tax Credit in payment can continue,

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