TCTM02480 - Entitlement: WTC entitlement - Qualifying remunerative work: Circumstances where a person may or may not be entitled to WTC when their employment has been affected by coronavirus (COVID-19)

Background

In March 2020 the government introduced a number of financial support schemes for employers and the self-employed. The Coronavirus Job Retention Scheme (CJRS) enabled employers to retain their employees by paying them a percentage of their pay, and the Self-employed Income Support Scheme (SEISS) which was paid to self-employed workers. As a result of the coronavirus pandemic many employees and self-employed workers were unable to work their normal hours, meaning that they were unable to satisfying the basic conditions of entitlement.

The Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002, Reg. 7E

Measures introduced for working tax credit claimants

To ensure that a claimant’s WTC entitlement was not adversely affected in these circumstances specific measures were introduced where claimants are considered to be:

  • a person furloughed under CJRS,
  • a coronavirus-impacted worker whose hours have been adversely and directly affected by coronavirus, or
  • a person who has been notified by the NHS, their specialist or their GP that they are required to shield.

Where the hours a claimant normally works reduce to the extent that they no longer satisfy the Second condition (see TCTM02410), including a reduction to nil, the claimant is treated as being in qualifying remunerative work providing the following conditions are satisfied:

  • the reduction in hours is as a consequence of coronavirus, and
  • the reduction in hours is temporary.

Permanent change in hours

The claimant will be unable to rely on this easement if the change is permanent. This means that if the job ends, or there is a permanent reduction in hours to the extent that the claimant ceases to satisfy the Second condition, the claimant is required to report this as a change of circumstances. The claimant will only be treated as being in qualifying remunerative work for a further four weeks, starting from the date of the permanent change.

A furloughed employee unable to start a new job due to coronavirus

A claimant will be treated as being engaged in qualifying remunerative work where all the following apply:

  • they cease to be a furloughed employee under CJRS before the end of the Scheme,
  • within four weeks of the date they cease to be a furloughed employee, they accept an offer of work (or offered increased hours in another existing job) which satisfies the Second condition,
  • is subsequently notified by the employer that they cannot work the hours, and
  • this reduction in hours is due to coronavirus and is not permanent.

Returning to work after a period of “statutory absence”

If a claimant:

  • has been treated as being in qualifying remunerative work by virtue of reg 5 (TCTM02420) or reg 6 (TCTM02421),
  • was working at least 16 hours per week before that period of statutory absence, and
  • is unable to work at least 16 hours per week immediately after returning to work

providing the reduction in hours is due to coronavirus and is not permanent, they are treated as being engaged in qualifying remunerative work.

A person who ceases to be furloughed under CJRS

For the purposes of WTC a claimant ceases to be furloughed under CJRS when the earliest of the following applies:

  • the Coronavirus Job Retention Scheme ends,
  • the person ceases to undertake work, or
  • there is a permanent reduction in hours which means that the Second condition is no longer satisfied.

A person who ceases to be a coronavirus-impacted worker

For the purposes of WTC a claimant ceases to be a coronavirus-impacted worker when the earliest of the following applies:

  • the Coronavirus Job Retention Scheme ends,
  • the person ceases to undertake work, (or the business ceases to trade), or
  • there is a permanent reduction in hours which means that the Second condition is no longer satisfied.

The “eight week rule”

When CJRS ceases a claimant will be allowed a period of eight weeks starting from the date the Scheme ends, to return to the hours they normally worked immediately before either being furloughed under CJRS or becoming a coronavirus-impacted worker. However, it must be the claimant’s intention to return to those hours at the point CJRS ceases.

If the claimant is able to return to the required hours within the eight week period, they will be treated as meeting the entitlement conditions for qualifying remunerative work.

If the claimant fails to return to the required hours within the eight week period, they will only be treated as being engaged in qualifying remunerative work for a further four weeks, starting immediately after the end of that eight week period.

However, if during the eight week period the claimant’s job ends (or the business ceases to trade), or there is a permanent reduction in the hours they normally work meaning that they no longer satisfy the Second condition, they will only be treated as being in engaged in qualifying remunerative work for a further four weeks, starting from either the date the job ends or the date the hours permanently reduce.