27 March 2020
Coronavirus outbreak (Covid-19) – Tax credit and Universal Credit policy announcements
Several measures relating to tax credits and universal credit (UC) are being brought in because of the impacts of the current coronavirus outbreak.
These additional measures are being introduced temporarily.
Information is also available on the GOV.UK website and on the Coronavirus page on the DWP’s Understanding Universal Credit website.
The Low Incomes Tax Reform Group (LITRG) has published a Coronavirus Guidance section on their main website covering a range of tax, benefit and associated topics in relation to the impacts of the current coronavirus outbreak.
Tax Credits
For one year, the basic element of working tax credit is increased by £1045 on top of the already announced and planned annual uprating. This will bring the basic element of WTC to £3040 from 6 April 2020.
Universal Credit
The Chancellor announced that the UC standard allowance would increase by £1000 (approx.) over a year on top of the planned uprating. The monthly figure, which is used to calculate individual UC awards per assessment period, equates to increasing each of the standard allowance (after previously announced planned uprating) rates by £86.67. This measure is temporary, for a year.
Self-employed claimants who are sick or self-isolating in line with official guidance will not have the minimum income floor applied to their UC award whilst they are affected (introduced from 13 March 2020). From 6 April 2020, the MIF will not be applied to any UC awards from self-employed claimants for the duration of the outbreak.
People who are self-employed and making a new claim for UC are not required to attend an interview at a Jobcentre office to demonstrate they are gainfully self-employed
From 19 March 2020, there will be no face to face meeting requirements for UC claimants.
Those making a new claim for UC may still need to make an appointment for their new claim interview. This interview will take place by telephone with a work coach. Claimants will be given the number to call to book this appointment when they submit their claim.
All face-to-face assessments for health and disability-related benefits have been suspended. This is aimed at reducing the risk of exposure to coronavirus and safeguarding the health of individuals claiming health and disability benefits. Anyone who already has assessment appointment arranged, does not need to attend they will be contacted to discuss the appointment and any further arrangements. Anyone who has claimed and has not yet been given a date for an assessment does not need do anything as they will be contacted by telephone or letter to explain what will happen. We also understand that reviews of various disability benefits will also be suspended for a 3 month period.
From April, Local Housing Allowance rates are increased to the 30th percentile of market rents. This will apply to all private renters who are new or existing Universal Credit housing element claimants, and to existing Housing Benefit claimants.
New support for employees and for self-employed
Employed workers under PAYE
The Government is introducing a new scheme, the Coronavirus Job Retention Scheme which is designed to help employers retain their workforce while they have to take temporary unpaid time off as a result of the impacts of the coronavirus outbreak. The idea is that employees who are ‘furloughed’ will be able to receive 80% of their pay .The scheme will allow employers to get a grant from HMRC to cover 80% of their employee’s wage up to £2,500 a month where the employee is paid under the Pay As You Earn (PAYE). Full details of the scheme are not yet available but it is expected that the first payments will be available by the end of April. Payments can be backdated to 1 March and the scheme is initially set to run for up to 3 months.
Self-employed workers
There will be a new scheme to provide help for self-employed workers with the Government providing a direct cash grant of 80% of their profits, up to £2,500 per month. The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. This new income support scheme is being designed by HMRC from scratch, will cover the three months to May. Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.
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