2 November 2020

Working Tax Credit - HMRC extending coronavirus rules

Special tax credit rules for people whose working hours change temporarily due to coronavirus will be extended while the Job Retention Scheme and then the Job Support Scheme are in place.

Initially, these changes only applied until 31 October 2020 but, as the Job Retention Scheme is now to be extended, the special rules will continue. Once the Job Retention Scheme ends and is replaced by the Job Support Scheme, we understand the special rules will also continue to the end of the Job Support Scheme (currently scheduled 30 April 2021). This applies to temporary changes to working hours as a result of the coronavirus even if the claimant is not receiving support linked to either the Job Retention Scheme or the Job Support Scheme.

In response to the coronavirus pandemic, HMRC introduced new legislation to allow people whose working hours reduced or who were temporarily laid off (such that they would not meet the hours thresholds for working tax credit) due to coronavirus, to be treated as working the hours they were doing before the coronavirus pandemic. The legislation effectively allows temporary changes to working hours due to coronavirus, for both the employed and self-employed, to be ignored. Only permanent changes need to be reported to HMRC whilst the Job Retention Scheme, and subsequently the Job Support Scheme, remains in place.

The current legislation applies until the end of the Job Retention Scheme, we understand further legislation will be published in due course to cover the extension of the rules to the end of the Job Support Scheme.