The Tax Credits (Coronavirus, Miscellaneous Amendments) Regulations 2020

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend a number of statutory instruments in relation to tax credits (social security benefits which are administered by Her Majesty’s Commissioners for Revenue and Customs) in consequence of the establishment of the Coronavirus Job Retention Scheme (which was established under a direction given by the Chancellor of the Exchequer under sections 71 amd 76 of the Coronavirus Act 2020 (c. 7)).

Regulation 1 provides for citation and commencement.

Regulation 2 amends the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 (“the Entitlement Regulations”) (S.I. 2002/2005). Paragraph (2) amends regulation 2 of the Entitlement Regulations to include additional definitions. Paragraph (3) inserts a reference to new regulation 7E (inserted by paragraph (5)) into regulation 4(1A) of the Entitlement Regulations. Paragraph (4) amends regulation 4 of the Entitlement Regulations to provide that any period of absence from work to undertake emergency volunteering leave (under schedule 6 to the Coronavirus Act 2020) in relation to the coronavirus pandemic will be disregarded in reckoning a claimant’s hours for qualifying remunerative work.

Entitlement to working tax credit depends upon a person undertaking qualifying remunerative work as defined in regulation 4(1) of the Entitlement Regulations. Regulation 7D makes provision for a person who ceases to work or reduces their hours and who as a consequence loses entitlement to working tax credit to continue receiving that tax credit for a further period of four weeks. Paragraph (5) of regulation 2 inserts a new regulation 7E which covers the situation where a person (P) has been furloughed under the Coronavirus Job Retention Scheme, is shielding or has been asked by P’s employer not to work P’s usual hours. In all the cases identified in new regulation 7E(2), P will be treated as being engaged in qualifying remunerative work. New regulation 7E(4) and (6) make provision for the end of the Coronavirus Job Retention Scheme. Where a person returns to work but for a reduced number of hours that person will be treated as being engaged in qualifying remunerative work for an eight-week period. If by the end of that period that person does not meet the conditions in regulation 4(1) or if during that period that person ceases to work or the hours of work are permanently reduced, that person loses entitlement to working tax credit but will continue receiving that tax credit for a four-week period.

A claimant who works at least 30 hours is entitled to an additional element of tax credits - the 30 hours element. Regulation 2(6) amends regulation 10 of the Entitlement Regulations to provide for the situation where a claimant who was working, but less than 30 hours, is furloughed under the Coronavirus Job Retention Scheme but is then subsequently employed in a second job.

Regulation 3 amends the Tax Credits (Definition and Calculation of Income) Regulations 2002 (“the Income Regulations”) (S.I. 2002/2006). Paragraph (2) amends regulation 2 of the Income Regulations to include additional definitions. Paragraph (3) substitutes regulation 6 of the Income Regulations to extend the definition of “taxable profits” to include any grant received under any of the coronavirus support schemes. Paragraph (4) substitutes regulation 18 (which defines “miscellaneous income”) to include payments made under a coronavirus support scheme. As a consequence, where such payments are not dealt with under any other provision of the Income Regulations, they are taken into account as miscellaneous income. Paragraph (5) amends Table 6 in regulation 19 of the Income Regulations by inserting three new entries. This Table specifies the sums that are to be disregarded in the calculation of income for the purposes of tax credits.

Regulation 4 amends the Tax Credits (Claims and Notifications) Regulations 2002 (“the Claims Regulations”) (S.I. 2002/2014) to extend the time within which notice of a change of circumstances which affects the rate at which a tax credit is to be awarded (or means that there is no longer an entitlement to that tax credit) is to be given. The extension of time only applies to claimants who are critical workers (defined in regulation 2 of the Claims Regulations with the definition being inserted by regulation 4 of these Regulations) and only for the duration of the Coronavirus Job Retention Scheme (defined in regulation 2 of the Claims Regulations, with the definition being inserted by these Regulations).

A full impact statement has not been produced for these Regulations because no impact on the private or voluntary sectors is foreseen.