⚠️ We are working hard to ensure this guidance is up to date. However, you should bear in mind that things may change as the government respond to the ongoing situation.
Coronavirus: Bonus payments for certain employees
What is the £500 gift for staff in employed in the social care sector in Wales?
In May 2020, the Welsh Government announced that it would fund a £500 extra payment for staff employed in the social care sector in Wales.
The payment is available to agency staff and nursing staff employed in care homes; personal assistants and domiciliary care workers providing care to people in their own homes; ancillary staff, such as cleaners and kitchen staff.
In order to be eligible, individuals must have worked between 15 March and 31 May 2020.
Most employees should have received the payment in October 2020.
What is the £500 bonus for NHS and social care staff in Scotland?
In November 2020, the Scottish Government announced that it would fund a one-off payment for NHS staff and social care workers in Scotland.
The payment is £500 for full-time staff and pro-rated for part-time staff.
The payment is available to NHS and social care workers employed since 17 March 2020, including those who have had to shield or who have since retired.
A full list of employees eligible for the payment is available on the Scottish Government website.
Most employees should have received the payment in their February 2021 salary.
Employees of NHS Scotland had the option to take the payment in instalments over three months, rather than in one payment.
What is the £500 special recognition payment for nurses in Northern Ireland?
In January 2021, the Northern Irish Government announced that it would fund a one-off payment for NHS staff and social care workers in Northern Ireland.
The detail of the proposal is still uncertain.
The intention is for employees to receive the £500 payment in 2021.
Is the £500 taxable?
In both the Welsh ‘gift’ and the Scottish bonus cases the payments were made in recognition of employment. As such, these payments automatically fall within the definition of employment income. This means they are taxable as employment income.
Employment income is non-savings and non-dividend income. This means that Welsh taxpayers pay income tax on the payment according to the Welsh rates of income tax, and Scottish taxpayers pay income tax on the payment according to the Scottish income tax rates and bands.
The amount of tax due depends on the marginal rate of income tax of the recipient.
A Welsh basic rate taxpayer pays £100 income tax on the £500 gift.
A Scottish intermediate rate taxpayer pays £105 income tax on the £500 bonus.
For more information on the Welsh rates of income tax for 2020/21, see our separate guidance.
For more information on the Scottish rates of income tax for 2020/21, see our separate guidance.
Is the £500 subject to National Insurance?
In both the Welsh ‘gift’ and the Scottish bonus cases the payments were made in recognition of employment. As such, these payments automatically fall within the definition of employment income. This means they are employment earnings and subject to Class 1 National Insurance contributions.
National Insurance is payable according to the same rates and thresholds throughout the UK.
We expect most basic rate and intermediate rate taxpayers to pay National Insurance on the payment at the rate of 12% - meaning £60 is deducted from the payment of £500.
Does the £500 affect student loan repayments?
Student loan repayments are based on weekly or monthly earnings as a proportion of the annual repayment threshold (£19,390 for 2020/21 and £25,000 for 2021/22). If the £500 bonus takes the weekly or monthly income over the threshold, the borrower repays the student loan at a rate of 9% of any income over the threshold. However, if total annual earnings are not greater than the annual repayment threshold, the borrower can apply to the Student Loans Company for a refund of the student loan repayments.
Is the £500 counted for tax credits or universal credit?
In general, earnings are taken into account for tax credits and universal credit. So, we would expect that if you are claiming means-tested benefits, such as universal credit or tax credits, the bonus payments would be treated as earned income. In most cases, your employer will include the bonus payments with the earnings information they send to HMRC/DWP but if you think that hasn’t happened or are in any doubt, you should check with HMRC/DWP.
For universal credit, the net amount of the payment, after income tax and National Insurance deductions is taken into account.
For tax credits, the gross amount of the payment is taken into account.
Where can I find more information?
The Welsh Government has published detailed guidance on the social care workforce gift.
The Scottish Government has published a detailed list of questions and answers in relation to the Scottish bonus payment.