Do you get working tax credit? Make sure you understand the temporary tax credit rules due to coronavirus
HMRC have announced they are extending special tax credit rules for people whose working hours change temporarily due to coronavirus. Initially, these changes were expected to apply until 31 October 2020 but HMRC have now confirmed they will be extended whilst the Coronavirus Job Retention Scheme remains in place and, after that, to the end of the Job Support Scheme (currently 30 April 2021). This applies to temporary changes to working hours due to coronavirus even if you are not receiving support that is linked to the Job Retention Scheme or the Job Support Scheme.
Working tax credit entitlement is based on meeting certain working hour thresholds (16, 24 or 30 depending on your circumstances). The number of hours you work is generally based on your ‘normal’ working hours.
With the current situation, you may have had your normal hours reduced, have been laid-off temporarily, been ‘furloughed’ or made redundant.
Under the special tax credit rules, you only need to report a change of hours to HMRC if it is a permanent change to your working hours, for example if you are made redundant, have your hours permanently reduced or you are self-employed and stop trading completely. Any temporary changes to working hours as a result of coronavirus do not need to be reported to HMRC until both the Job Retention Scheme and the Job Support Schemes end. You will be treated as continuing to work the hours you were working before they reduced or stopped due to coronavirus.
We have published a table which explains in more detail how changes to your work might affect your working tax credit and when you need to report changes to HMRC. We also explain all of the other changes to tax credit rules due to the coronavirus pandemic.
We have also published a blog post on our website for advisers, Revenuebenefits, which explains more about the legislative position of this latest announcement.