⚠️ This is a news story and may not be up to date. You can find the date it was published under the title. Our Tax Guides feature the latest up-to-date tax information and guidance.
Government help with your finances during the coronavirus outbreak
⚠️ This article was written on 16 March 2020. It is no longer up to date. Some things have changed since it was written and we have produced guidance pages that cover the same information in more detail. Please see our coronavirus guidance pages for the latest information.
It is hard to say how much the current Covid-19 (the coronavirus) outbreak is going to affect businesses and household incomes. Looking at the impact in other countries, people may well be feeling nervous about how their finances will hold up if they have to stay away from work for any length of time or if their business, or the business they work for, suffers prolonged trading difficulties.
The Government are introducing a series of temporary measures aimed at helping people over the duration of the outbreak. Some of these have been announced previously and others in the Chancellor’s Budget announcement on 11 March 2020. With so much uncertainty at this time, other announcements may follow.
Here we summarise the key provisions as of 11 March 2020 and flag up some potential points of confusion/things to be aware of. It is important to note, particularly around the sick pay provisions, that these are the bare minimum provisions under the law – it may be the case that your employer or business you work for has more generous arrangements in place.
Statutory Sick Pay (SSP)
Statutory Sick Pay is to be paid from the first day of sickness absence, rather than the fourth day, for people who have COVID-19 or have to self-isolate, in line with official guidance. This measure will be included in emergency legislation, which is expected to be passed shortly (we understand it will be backdated to 13 March 2020).
In the Budget, the Chancellor set out a further package to widen the scope of SSP with the aim of making it more accessible, for example that employees will be able to get any evidence they need from an NHS 111 online facility.
SSP is available for people who are paid under the Pay As You Earn system and who earn at or above £118 per week (increasing to £120 a week from 6 April 2020). People who earn less than £118 (£120 from 6 April) per week or those treated as self-employed for tax purposes by their engager are not entitled to SSP.
We are aware of some confusion around SSP entitlement. It is important to clarify that SSP is not a ‘worker’ employment law right but rather one that is tied to whether Class 1 National insurance is paid. This means that agency workers and zero hours contract workers who pay their tax and NIC under PAYE may qualify, whereas those in self-employment (even if it is 'dependent' self-employment) won’t, as they don't pay Class 1 NIC.
Support for those not entitled to SSP
The Government expect people not entitled to SSP to access financial support through the benefits system – in particular, ‘new style’ Employment and Support Allowance (the new name for contributory ESA) and Universal Credit.
In the Budget, it was confirmed that that 'new style' ESA will be paid from day 1 rather than day 8 for people suffering from COVID-19 or required to self-isolate in line with official guidance. In order to qualify for ‘new style’ ESA, there are several National Insurance Contribution (NIC) requirements which are explained on the ‘Entitledto’ website.
You should be aware that if you are a person in very low-paid employment or self-employment, you are not necessarily going to easily meet those NIC requirements, particularly, for example, if you work in low-paid self-employment and have not yet have filed your tax returns (this is the method through which you pay NIC if you are self-employed).
Those who cannot claim SSP or new style ESA will have to rely on income-based benefits – and for most people that means Universal credit.
Universal credit replaces six benefits - income support, income-based jobseeker's allowance, income-related employment and support allowance, housing benefit, child tax credit and working tax credit. (It does not replace contributory or 'new style' ESA which means you can get new-style ESA on its own or at the same time as universal credit.)
There are a number of conditions that have to be satisfied in order to claim UC. These are described on our Revenue Benefits website.
If you have a partner who is working, your household income may be too high to qualify for any support. Similarly, if you have a certain amount of capital, you may not qualify. This means that universal credit is not a solution for everyone.
In addition, those who are already in receipt of other support, for example child tax credit or housing benefit, should seek specialist welfare rights advice (see the Advicelocal website for help finding an adviser) before making a universal credit claim, especially if only needed for a short period, because once a universal credit claim is made their other benefits will stop.
New universal credit claimants usually have to wait 5 weeks before they receive their first payment but they can get an advance immediately once their claim is accepted. It is important to remember that advances must be paid back.
Initial claims for universal credit are usually made on-line and the Chancellor has announced that people will be able to claim universal credit and access advance payments where they are directly affected by COVID-19 (or self-isolating in line with guidance), without the usual requirement to attend a Jobcentre in person.
Universal credit – Minimum Income Floor
For self-employed claimants, the Chancellor has announced that the requirements of the minimum income floor will be temporarily relaxed for those directly affected by COVID-19 or self-isolating in line with guidance, for duration of the outbreak.
The minimum income floor (MIF) applies to universal credit claimants who are gainfully self-employed and in the all work requirements category. The level of the MIF is broadly the equivalent of the national minimum wage multiplied by the working hours requirement in the claimant commitment (usually 35). Where the claimant’s earned income in an assessment period is below their MIF, they are treated as having earned income equivalent to their MIF in their universal credit assessment.
Keeping up to date as the situation develops and finding more information
The information above may change as the situation develops so you should keep checking back to GOV.UK (where official information will be published) to keep up to date.
We have put together a list of some of the key information points:
- DWP have published information on coronavirus and claiming benefits on their Understanding Universal Credit website.
- Government healthcare information for employees, employers and businesses
- Government advice for the general public
- The official COVID-19 Action Plan, a public guide to the Government's enhanced plans to tackle the virus outbreak in this country.
House of Commons library briefing Coronavirus: claiming welfare benefits
Useful information about your rights if you are not sick or self isolating but need to take time off work to look after a child or other dependant can be found on GOV.UK. Guidance on the benefits available if you are laid off as a consequence of the outbreak can be found on our website.