⚠️ 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: £500 Test and Trace Support Payment
Here are some frequently asked questions about this payment. We continue to seek clarification on some outstanding points as to the tax and National Insurance treatment of it, so please check back for updates.
What is the NHS Test and Trace Support Payment?
There is a legal duty in England to self-isolate in place from 28 September 2020 if you test positive for coronavirus or are contacted by NHS Test and Trace, with fines for breaches. You can read more about it on GOV.UK.
In response to concerns that people were struggling to self-isolate due to financial constraints, a £500 lump sum support payment can be claimed by people on low incomes who cannot work from home and have lost income as a result of self-isolating.
The scheme applies to people notified to self-isolate on or after 28 September, not before that date.
The devolved administrations in Scotland, Wales and Northern Ireland have implemented their own schemes.
Who is making the payments?
Local authorities in England make the payments. You can find out how to contact your local authority on GOV.UK.
Who can claim the NHS Test and Trace Support Payment?
In England, the criteria for self-isolation payment is that you:
- have been instructed to self-isolate by NHS Test and Trace, either because you have tested positive or are in close contact of a positive case (from 10 December 2020, this has been expanded to include notification to self-isolate received via the NHS Covid-19 app)
- are employed or self-employed
- are unable to work from home and will lose income as a result
- are currently receiving Universal Credit, Working Tax Credit (WTC), income-based Employment and Support Allowance, income-based Jobseeker’s Allowance, Income Support, Housing Benefit and/or Pension Credit
We understand that the final rule means you do actually have to be receiving one of the benefits/payments listed above rather than just entitled to it, for example people who are entitled to WTC but who have it reduced to nil due to income levels (so you only receive child tax credit payments), don’t appear to qualify.
However, local authorities in England have discretion to award the £500 self-isolation payment to those who do not receive qualifying benefits.
People in the same household can each make an individual application to receive the payment, if you each meet the criteria.
How do I apply?
We understand that you need to make an online application via your local authority’s website (or a telephone application if you can’t use the online application because you are digitally excluded) and will have to submit supporting evidence such as:
- a notification from NHS Test and Trace asking you to self-isolate (this will include a Unique ID number or ‘code’);
- a bank statement; and
- proof of employment, or, if you are self-employed, evidence of self-assessment returns, trading income and proof that your business delivers services which cannot be undertaken without social contact.
Each local authority’s processes and requirements may differ slightly.
Local authorities should be able to access an internal computer system that shows if you are receiving any of the qualifying benefits, as well as access to NHS Test and Trace data, to verify if you have been told to self-isolate.
Is the £500 taxable?
We understand that the intention is that these payments will be subject to income tax, although not subject to National Insurance contributions, for both employees and the self-employed.
The payment is made gross by the local authorities – that is, without any tax taken off it before it is paid to you.
This means that if you are:
- self-employed: you will need to include the payment in your tax return as a receipt of your business and pay any tax through the tax return. It is unclear, as yet, where the payment should be included. We will seek to clarify this and will put out update our guidance on this in due course.
- employed: HMRC will try to collect the tax due by ‘coding’ the payment into your tax code, or if they are unable to do that, will pick it up as income at the end of the tax year in the P800 reconciliation. Where this reconciliation shows you have not paid enough tax for 2020/21, your PAYE code for 2021/22 is likely to be changed aiming to collect the tax you owe. For more information on how tax codes work, see our guidance in the Tax basics section. For more information on the P800 process, see our guidance here.
It is important that you budget for the fact that, if you have taxable income from other sources in the 2020/21 tax year and it is more than your tax-free personal allowance, you will have to pay tax on the £500 support payment.
What can I do if my tax code changes and this leaves me without enough pay to live on?
Where HMRC change your PAYE code before 6 January 2021 to include the £500 test and trace payments, they will aim to collect the tax due on it over the last three months of the tax year. You might therefore see your pay for January, February and March reduced. Particularly if you have received more than one test and trace payment and had these included in your code, you might find the impact on your after-tax pay is more than you can afford.
In this situation, contact HMRC to explain that you are struggling with money and ask if they will agree to spread collection of the tax due over a longer period – perhaps over the 2021/22 tax year.
Can I get it on top of Statutory Sick Pay?
Yes, this payment is separate to statutory sick pay and you are able to receive this payment on top of any Statutory Sick Pay you are entitled to.
Can I get it if I have to take time off work to look after a child who is self-isolating?
In England, the payment cannot be claimed unless you are instructed to self-isolate as explained above. You cannot access the payment if you have to take time off due to your child self-isolating.
However, in Scotland and Wales, you can now claim a similar payment in this situation.
Are the payments counted for tax credits or universal credit?
We understand the payments will not be counted as income for tax credits or universal credit, which is a logical step and follows the treatment of payments under the earlier self-isolation payment scheme piloted in parts of England.
What about the scheme that made payments of up to £182?
A pilot scheme, called NHS Test and Trace Self-Isolation Payment, was announced in August, under which payments of up to £182 were made to people who tested positive for COVID-19 and their contacts in Blackburn with Darwen, Pendle, and Oldham.
The £500 Test and Trace Support Payment is available across England and replaced the pilot in those areas from 28 September 2020.
Can I get the £500 payment more than once?
If you are asked to isolate more than once, then it seems that a claim can be made for each period of self-isolation required. All eligibility criteria must be met and supporting evidence provided for each claim.
The more times you get the £500 payment, the more money you may need to put aside to cover the tax that will be due on it.
Do I qualify if I have been told by the official NHS COVID-19 contact tracing app to self-isolate?
When the scheme was first introduced, the answer to this question was no. However, the Health and Social Care Secretary, Matt Hancock announced that from 10 December, people instructed to isolate by the app are eligible and can claim the payment directly through the app.
Because the app itself is entirely anonymous you will not get a payment code automatically from the app itself and there are a couple of additional steps you will need to follow to claim the payment following notification to self-isolate via the app.
What about Scotland, Wales and Northern Ireland?
In Scotland, the payment is called the Self-Isolation Support Grant. You can now apply for a grant. The Scottish Welfare Fund will deliver the grant – this is administered by local authorities. More details are available on the Scottish Government website.
In Wales, the payment is called the Self-isolation support payment. You can now apply for a payment. Local authorities are administering the payment.
In Northern Ireland, a Discretionary Support self-isolation grant might be available in similar circumstances.