Coronavirus (COVID-19): £500 payment for health and social care staff - guidance for former employees of social care providers who have ceased trading

Guidance for former employees from adult social care services or children’s residential care in the third, voluntary, charitable or private sector, registered with the Care Inspectorate.

HMRC has confirmed that these payments made to employees are regarded as earnings and will be liable for tax, National Insurance contributions, student loan repayments, and tax credits, where appropriate.

The DWP has confirmed that the payment will be treated as income when calculating benefit entitlements. The ability to exempt the payment from benefit calculations is not within the current powers of the Scottish Government.  Recipients who are in receipt of Universal Credit would need to notify their work coach of the change in their circumstances in order to avoid any overpayments which may result in issues with their payment.

These payments will be fully disregarded in the calculation of Council Tax Reduction.

The payment is considered as “non-consolidated”. Therefore it is not pensionable and does not create a new baseline for future pay calculations. 

13.8% will be added to each payment for employer National Insurance contributions (NICs).

Anyone in receipt of benefits should seek advice from the DWP.

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