Working Tax Credit increase: Will furlough affect your Working Tax Credit?
Working Tax Credit will increase by £20, up to £86.67 a week for one year from April 6 because of the coronavirus outbreak. Working Tax Credits are used as income support for low income earners in the UK, although the scheme has largely been replaced by Universal Credit for most people.
There’s no set limit for income because it depends on your circumstances and those of your partner.
The Government website provides an example of “£18,000 for a couple without children or £13,100 for a single person without children – but it can be higher if you have children, pay for approved childcare or one of you is disabled.”
According to the Government, if you are earning less because you have been put on furlough, your Working Tax Credit payment might change.
The amount you receive will most likely go up if your income has been reduced.
- Universal Credit is rising by this amount in a matter of days
Jennie Brown, Tax Partner at Streets Chartered Accountants, said: “If you are furloughed through the Coronavirus Job Retention Scheme your employer may be entitled to a grant to cover up to 80% of your salary up to a maximum of £2,500.
“Due to the current Coronavirus crisis, HM Revenue & Customs has confirmed they will treat you as continuing to work your normal hours, meaning those before you were furloughed, for at least 8 weeks.
“There will, therefore, be no change to your working tax credit entitlement during that period and we are waiting for further guidance to understand what would happen after 8 weeks.
- Universal Credit for self employed How to claim Universal Credit
“You do not need to tell HM Revenue & Customs when you are furloughed temporarily, but if it is still ongoing after 8 weeks you should check the Government website to see if this period has been extended or whether you need to report the change. The much-awaited further guidance in this area will help to make this much clearer for those who are furloughed beyond 8 weeks.”
You will need to contact HMRC to see if you are eligible to receive more money if you have been put on furlough.
The increase in Working Tax Credits is part of the Government’s response to the coronavirus crisis.
The Job Retention Scheme was brought in by Chancellor Rishi Sunak to help businesses keep employees and stop the country falling into economic ruin.
The job scheme will cover the cost of wages up to 80 percent, backdated to March 1 and will be open for a period of three months initially.
The scheme will be reviewed during that time and potentially extended for longer if necessary.
All employees in the UK who are recipients of a salary via a pay as you earn scheme are eligible for the scheme.
This includes public sector workers, local authorities and charities.
A similar scheme is also running for self-employed individuals.
Chancellor Rishi Sunak said: “Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.
“Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.
“Government grants will cover 80 percent of the salary of retained workers up to a total of £2,500 a month – that’s above the median income.
“And, of course, employers can top up salaries further if they choose to.”
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