HMRC confirms that working tax credit claimants not working their normal hours because of Covid-19 will no longer automatically retain entitlement

Easement of normal tax credit rules for laid off workers to be lifted from 25 November 2021

Her Majesty’s Revenue and Customs (HMRC) has announced that working tax credit claimants who are not working their normal hours because of Covid-19 will no longer automatically retain their entitlement.

An easement introduced in the first months of the Covid-19 pandemic has treated claimants working reduced hours due to coronavirus, or those furloughed by their employer, as if they are still employed or self-employed. This has enabled their tax credit awards to continue while also removing the requirement to inform HMRC of temporary reductions in working hours.

NB - under normal rules for employees, set out in HMRC’s technical guidance on tax credit entitlement when laid off, people are treated as engaged in remunerative work for four weeks after a lay off, or until they are laid off indefinitely if shorter, so that they continue to receive tax credits for that period (in addition to any entitlement to a four-week run-on).

However, confirming that the easement is to be removed, HMRC advises that -

‘Customers do not need to tell HMRC if they re-establish their normal working hours before 25 November 2021, but from then, they must do within the usual one-month window if they are not back to working their normal hours shown in their working tax credit claim.’

HMRC’s Director General for Customer Services Myrtle Lloyd said -

‘We introduced this measure last year to help support working families. It is vital that working tax credit claimants who have benefited from it update HMRC with their working hours if they have reduced, and they won’t return to their normal level before 25 November.

Anyone who is no longer eligible for working tax credit due to a change in their circumstances may be able to apply for other UK Government support, including universal credit.'

For more information, see Working Tax Credit customers must report changes to working hours from gov.uk