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Coronavirus: Tax Credits - £500 payment



Tax Credits - £500 payment

Key points

Most Tax Credits claimants who were eligible for the one-off £500 payment received it back in April 2021.

Some claimants did not receive the £500 payment back in April but received it later on in 2021 - once their Tax Credits award for the year to April 2021 was finalised. This could have been the case where their estimated income meant no eligibility for either Working Tax Credit or Child Tax Credit when their case was checked back in April 2021. However, when their award was finalised, it turned out that their earned income was actually less than expected - and so there was an award of Tax Credits that covered 2nd March 2021 (the date needed to qualify for the one off £500 payment).

Anyone who thinks they should have been eligible for the payment and who has not received it should contact HMRC.


Why was there a £500 payment?

For the 2020/2021 tax year there was a higher Standard Allowance for Working Tax Credit (£20 per week 'uplift'). The same increase was given to Universal Credit claimants.

For the year 2021/2022 the Working Tax Credit Standard Allowance returned to the basic rate, whereas for Universal Credit the uplift remained in place until 5 October.

So, for Working Tax Credit claimants, for the 6 months from April to September 2021, the government decided to give Working Tax Credit claimants a one-off payment of £500 in April 2021.

 

Who got the £500 payment?

Eligibility for the £500 payment was based on eligibility for Working Tax Credit on 2nd March 2021. This also included those who were entitled to both Working Tax Credit and Child Tax Credit but they only received Child Tax Credit because their earnings are too high for them to receive both. 

There was no need to make an application for the £500 payment, as HMRC contacted claimants by text message or letter in April to confirm they were eligible. Payments should have been received by 23rd April 2021.

More details on the gov.uk website - click here.

 

Did the £500 payment affect Housing Benefit?
As it was a one-off payment, it did not count as income for Housing Benefit, but if the payment took the claimant’s savings over £6000, they should have notified the HB Office.
 


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