Coronavirus (COVID-19): social care workforce payment – guidance for local authorities

Tax and benefits

HMRC has confirmed that these payments made to staff 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 also be included in benefits calculations. The ability to exempt the payment from benefit calculations is not within our current powers. 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. 

Scottish Government will add 13.8% to each payment for employer National Insurance contributions (NICs), 0.5% for Apprenticeship Levy and appropriate further amounts for any other employer related costs as a result of this payment.

Anyone in receipt of benefits should seek advice to ensure that they will not be negatively impacted by the payment. Important information for staff in receipt of benefits is provided in the standard form of words for communication to staff in the communication templates section.