(This note is not part of the Regulations)
These Regulations amend the Tax Credits (Definition and Calculation of Income) Regulations 2002 (S.I. 2002/2006) (“the Income Regulations”) and the Working Tax Credit (Entitlement Maximum Rate) Regulations 2002 (S. I. 2002/2005) (“the Entitlement Regulations”).
Regulation 1 provides for citation and commencement.
Regulation 2 amends the Income Regulations (which define what is income for the purposes of tax credits). Paragraph (2) substitutes a new regulation 6 which defines “trading income”. Regulation 3(3) of the Tax Credits (Coronavirus, Miscellaneous Amendments) Regulations 2020 (S.I. 2020/534) substituted regulation 6 so that any payments or grants received by a tax credit claimant from a coronavirus support scheme (which term is defined in regulation 2(2) of the principal Regulations) would be included as trading income. As a consequence of amendments made by section 106 of, and Schedule 16 to, the Finance Act 2020 (c. 14), regulation 6 resulted in the income of some claimants being taken into account twice. The amendment made by regulation 2(2) ensures that such income is only taken into account once.
Paragraph (5) makes two amendments to Table 6 in regulation 19. Entry 36, which was inserted by S.I. 2020/534, is revoked as payments made under the NHS and Social Care Coronavirus Life Assurance Scheme are not income for the purposes of calculating a claimant’s income for tax credit purposes and therefore do not require to be disregarded. Paragraph (5) also inserts a new entry (entry 37) so that payments made under the NHS Test and Trace Self-Isolation Payment Scheme are disregarded in calculating income for tax credit purposes.
Regulation 3 amends the definition of “furloughed employee” in regulation 2 of the Entitlement Regulations to reflect the further direction given by the Chancellor on 25 June 2020.
A full impact statement has not been produced for these Regulations because no impact on the private or voluntary sectors is foreseen.