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

Key facts

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. (See below for details.)

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. 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 receive an award 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?

If the claimant is no longer working enough hours to qualify for Working Tax Credit, their entitlement to Working Tax Credit will end.

There is a 4-week run-on of Working Tax Credit - unless a claim for Universal Credit is made (they should get a benefit check to see what is their best option).

The claimant must inform HMRC if their work ends or their hours reduce below the normal amount required to qualify for Working Tax Credit. See section below for details of the key date of 25 November 2021.


Temporary measures that were previously in place

Temporarily not working / reduced hours

Some temporary measures were put in place during the Coronavirus pandemic, but these ended on 30th September 2021.

Working Tax Credit claimants whose working hours were temporarily reduced or stopped due to coronavirus, or who were furloughed, could remain on Working Tax Credit - so long as they were still employed or self-employed. This was because they were treated as working their normal hours until the Job Retention Scheme and Self-Employment Income Support Scheme ended, even if the claimant was not using either scheme. They did not need to contact HMRC about the reduced hours (as long as it was a temporary change and they remained employed or self-employed).

HMRC have added a new key date: 25th November 2021. 

If by 25th November 2021 a claimant is working their normal hours again, they don't need to contact HMRC. 

If, by 25th November 2021 their normal working hours have not been re-established, they will need to contact HMRC within one month.

But note that if a permanent change occurs - eg finishing work, or a permanent change of working hours - the claimant must report this to HMRC within one month of that change.

Info here.

Reporting changes

Critical workers were allowed extra time to report certain changes - these easements ended on 30th September 2021. Critical workers were given three months (instead of the usual one month) to notify HMRC of any changes that reduced or increased their tax credits.



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 were treated as working their normal hours while the Job Retention Scheme and SEISS scheme were 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.

 

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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