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May recap of the major benefits changes and Coronavirus (COVID-19)


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As new measures to control Coronavirus (COVID-19) are introduced Policy in Practice's Head of Policy, Zoe Charlesworth, summarises the major changes to the welfare system.

As part of the support we've been providing we’ve answered hundreds of questions from people worried about the impact of Coronavirus on their income.

In addition, Megan Mclean shares some of the common questions we’ve received on our Coronavirus support page from people who are worried about their income.

Special guest Victoria Todd, Low Incomes Tax Reform Group, updates us on tax credits.

Finally, Peter Carter briefly walks through software tools that help our clients to give the best advice possible to their customers.

Review the slides to learn:

- What policy measures are in place to protect people
- The impact of COVID-19 welfare measures
- What the main concerns of people are
- How organisations are responding

Register now for our next webinar 'Coronavirus: Stories from the frontline' taking place on May 20 at 10:30 here:

If the date of this webinar has passed you can view our webinars on demand here

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May recap of the major benefits changes and Coronavirus (COVID-19)

  1. 1. Recap of the major benefits changes and Coronavirus (COVID-19) Wednesday 6 May Policy in Practice webinar
  2. 2. Housekeeping ● Audio check ● Please ask questions ● Poll and a survey ● Aim to finish by 11:30 ● Slides and recording will follow
  3. 3. Today’s speakers Zoe Charlesworth Head of Policy Policy in Practice Victoria Todd Head of LITRG LITRG Megan Mclean Senior Policy and Data Analyst Policy in Practice Peter Carter Business Account Manager Policy in Practice
  4. 4. Give the best support you can to help people on their way policy software analytics
  5. 5. Agenda ● Overview of the COVID-19 changes and a look at some key issues ● Recent developments and a focus on tax credits issues ● The main concerns of people ● How organisations are responding ● Questions and answers
  6. 6. 666 Poll 1: What are you struggling most with at the moment?
  7. 7. 777 Over to Zoe Overview of the COVID-19 changes and a look at some key issues
  8. 8.
  9. 9. Coronavirus Job Retention Scheme ● 4 months from 1 March 2020 to end June 2020 ● Employed on 19 March, paid through PAYE and with a UK bank account ● Grant for 80% of the salary, or average of last year’s salary, or pay equal to that in the same month in previous year, or pro-rata pay. Up to £2,500, plus employer’s NI contribution and minimum pension contribution ● Can’t undertake work for that employer but you can work for others and furlough must last at least 3 weeks ● Applies to all salaried staff (students, NRPF, apprentices, salaried directors) ● The employer has to apply for the job retention scheme, leaving some employees feeling powerless or confused
  10. 10. Self-employed Income Support ● Open to those who have completed a self-employed tax return for 2018/19 and are currently self-employed ● Must have self-employed trading profits < £50,000 in 2018/19 and self- employment is > 50% of taxable income ● Average of 80% of trading profit calculated over the last 3 tax years, up to £2,500/month ● HMRC will invite claimants to apply. The grant will be paid as a lump sum and count as business income for tax credit and UC purposes
  11. 11. Impact 1: Universal Credit claims In the 6 weeks to 12 April 2020 DWP received over 1.8 million declarations to Universal Credit. This is almost 5 times higher than declarations received from people in the same period last year. On its first day, the Job Retention Scheme received over 140,000 applications from companies paying the wages of the equivalent of a million workers Traffic to our Benefit and Budgeting Calculator quadrupled and we answered circa 1,000 questions on our website from people worried about their finances
  12. 12. Universal Credit changes Data analysis on a representational dataset showed that as a result of the UC measures: ● More households in receipt of Universal Credit will be able to meet their bills (from 10% to 16%) ● The average increase in Universal Credit awards as a result of changes from April 2020 is £98/month, an increase of 7.3%
  13. 13. Impact 2: Legacy vs Universal Credit
  14. 14. Impact 3: Tax Credits vs Universal Credit For those in receipt of WTC and awaiting a grant, the decision will rest on an individual assessment and consideration of circumstances ● £16,000 savings? ● Better off in the long run? ● Self employed and re-introduction of minimum income floor after 1 year? ● 5-week wait vs lower ongoing support? If claimants stay on Tax Credits, then inform HMRC of revised 2020/21 income
  15. 15. Impact 4: Benefit Cap Outside London In London
  16. 16. Impact 4: Benefit Cap continued Does the Benefit Cap now meet the initial objective? ● The justification for the benefit cap was fairness between those working and those not working, does this still hold true given that furloughed claims are also not working? How much does the Government think is needed to support households? ● Treasury minimum of £2,500/month ● DWP maximum of £1,917/month (London) or £1,667/month outside London Impact on local authorities ● DHPs - can LA support these additional claims? ● Welfare support for children ● Impact on homelessness - meeting the LHA is linked to homelessness
  17. 17. Impact 5: Two parallel welfare schemes ● Two parallel schemes create inequitable welfare support ● The new schemes are not targeted or means-tested. A couple both qualifying for the new schemes can receive £60,000/annum. A similar couple on UC could receive £7,128
  18. 18. Case study: Furlough vs redundancy Jack Lone parent with 2 children Private rent at LHA Earnings £30,000 / annum Furloughed £2,828 Jill Lone parent with 2 children Private rent at LHA Earnings £30,000 / annum Made redundant £1,721
  19. 19. Case study: Jack and Jill’s income
  20. 20. Case study:
  21. 21. Impact 6: Differences in CT support Inequitable Council Tax support Local authorities with 100% CTRS and CT charge of £100/month ● Claimant pays no Council Tax ● LA retains the majority of the Government funding for discretionary welfare Local authorities with 40% basic scheme and CT charge of £100/month ● Claimant still pays £27.50/month ● LA has little left for discretionary support although the claimants need the most support Welfare organisations need to understand the specific local situation
  22. 22. Impact 7: Surplus earnings Single person self-employed income is now £0, receives £1,000 UC/month Nil UC threshold = (£1,000*0.63) + WA £0 + threshold £2,500 = £3130/month From March – September this claimant receives £12,103 Without the grant they would have received £7,000. So the grant is worth £5,103 (not £7,500) There are implications for advisors due to the complexity, and implications for the claimant as they need to know to reclaim
  23. 23. Finally: future provision? What happens after the 3 month schemes run out? ● Extend grant schemes? - retains duality of welfare provision (not promoting fairness) - simple method to support millions of workers - shares burden between DWP and HMRC ● End grant schemes? - leave UC support as it is or increase it? - could DWP cope with the influx of cases? - implications for LAs plugging the gaps in support
  24. 24. 242424 Over to Victoria Recent developments and a focus on tax credits issues
  25. 25. Tax credits ● Working tax credit entitlement is based on meeting certain working hour thresholds (16, 24 or 30) depending on circumstances ● Number of hours you work is generally based on your ‘normal’ working hours. No legislative definition to help ● Prior to COVID 19 situation – generally accepted by HMRC that a disruption of up to 4 weeks, if temporary, would not impact normal working hours ● Start of COVID 19, extended this to 8 weeks ● Announced this week that this relaxation now applies until Job Retention Scheme closes – covers reduced hours, furloughed workers, unpaid leave, temporary lay-off, self-employed. No need to report change of hours ● Usual rules still apply if made redundant or permanent change of hours
  26. 26. Tax credits continued ... ● Even though there is no need to report temporary changes to working hours, people can report estimated income figures for 2020-21. This is not mandatory ● Must be careful not to overestimate falls in income - risk of overpayment ● Permanent changes to work/working hours must be reported and will may lead to tax credits stopping – four week run-on in some cases ● Things are changing rapidly – must keep checking current situation ● Remember that tax credits will be terminated if a claim for UC is made – HMRC/DWP position is that most people cannot make brand new claims for tax credits and other legacy benefits
  27. 27. Childcare ● The position for WTC childcare element is currently unclear ● Those who are continuing to work and sending children to their childcare provider can continue claiming ● Not clear on position for those who are still working (or treated as working) but who can’t use childcare but are still asked to pay or to pay a retainer ● DWP have recently published updated information for Universal Credit purposes – awaiting further information/clarification
  28. 28. Self-employment income support scheme (SEISS) ● The scheme will allow you to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether ● HMRC just launched an eligibility checker – but be aware it only checks against one of the qualifying conditions ● May be able to claim if you’re self-employed or a member of a partnership and: ○ you traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on ○ or before 23 April 2020 for that year ○ you traded in the tax year 2019 to 2020 ○ you intend to continue to trade in the tax year 2020 to 2021 ○ you carry on a trade which has been adversely affected by coronavirus ● In addition, trading profits no more than £50k and at least equal to non-trading income. £50k test is either based on 18/19 profits or average over 16/17-18/19 ● Online service available from 13 May – payment within 6 working days
  29. 29. Emerging issues related to SEISS scheme ● It will count as income for Universal Credit in assessment period it is received – may trigger surplus earnings ● It is taxable ● Those who changed from sole trader to limited company director in 2019/20 will not qualify ● Newly self-employed won’t qualify – Scottish scheme introduced to help (although conditions are fairly restrictive) ● Claims need to be made online and need a Government Gateway account – but we understand a telephone option will be made for those who can’t transact digitally ● HMRC calculate the grant – there will be a dispute process if you disagree with the amount
  30. 30. Emerging issues related to JR scheme ● Covers ‘furloughed’ workers – employer can claim up to 80% of regular wages up to monthly cap of £2,500 ● Furloughing is an employment law issue – not necessarily cost neutral for employers ● Emerging issues: ○ Confusion about key aspects of scheme leading to employers refusing to furlough ■ Not mandatory for employers to furlough staff ■ Wider than originally envisaged – can include people shielding and those with caring responsibilities if employer agrees ■ Employees cannot do any work for that employer – but can work for others if their contract allows it ■ Ability to take back people who had left (made redundant or resigned) and put them on furlough and access the scheme ■ Confusion around extension of the scheme to 19 March (previously 28 Feb)
  31. 31. Emerging issues related to JR scheme continued ... ○ Particular problems for those working for umbrella companies ■ Discretionary part of their pay ■ Holiday pay ○ Calculations are complex – currently no facility to make amendments once a claim is submitted and only 1 claim per pay period ○ Earnings are reported by employers to HMRC as usual under real time earnings rules – but seeing some changes to dates of payrolls which can impact Universal Credit payments ○ Directors of Limited companies – claims restricted to their salary (doesn’t include dividends) and those who run annual schemes may miss out
  32. 32. 323232 Over to Megan The main concerns of people
  33. 33. Q: I’m shielding for at least 12 weeks due to an underlying health condition, what am I eligible for? Statutory Sick Pay has been extended to those who are shielding due to high risk of Covid-19. You must be shielding for at least four days, though SSP will be paid from day one. Individuals who are shielding are also eligible for the Job Retention scheme if their employer agrees to place them on furlough. If this is not possible, check eligibility for UC, CTS and free school meals. I’m shielding, what support can I claim?
  34. 34. I’m receiving Working Tax Credits, will I be moved onto Universal Credit? Q: I’m receiving WTC and my hours have dropped, will I be moved onto UC? If this is a temporary change due to Coronavirus, HMRC will ignore this change in working hours during the Covid-19 crisis. If you are self-employed and have temporarily reduced your hours/ stopped trading, this will also be ignored. Tax credits will continue to be paid based on your old working hours. If this a permanent change, you’ll need to inform HMRC and move to UC (if eligible). Consider making a claim for CTS - this won’t trigger a move to UC. Some households may be better off choosing to move to UC - but each household should do a benefit check before claiming. Bear in mind the five week wait, future MIF for self-employed households, etc.
  35. 35. I don’t qualify for the self-employment scheme Q: I don’t qualify for the self-employment scheme, what support can I claim? People who don’t qualify include: those whose self-employed income makes up less than half of their taxable income, have profits over £50,000, weren’t self- employed in the 2018-19 tax year. Self-employed people aren’t usually eligible for New Style JSA. This requires you to have paid Class 1 National Insurance contributions over the past two to three years. Check eligibility for UC and CTS if savings are under £16,000. Other support mentioned earlier, e.g. business interruption loan.
  36. 36. I don’t qualify for any support Q: I’ve got no recourse to public funds and don’t qualify for Universal Credit. What can I claim? Some people won’t be eligible for most support - the two groups we’re hearing from most are students and those with no recourse to public funds. Both of these groups are eligible for the Job Retention Scheme/ Self-employment Income Support Scheme and New Style JSA/ESA. Students may be eligible for UC if their partner is eligible. People with no recourse to public funds may be eligible for UC if their partner may be eligible for UC (but only a single person allowance). They can get medical care if ill with COVID-19. As of April 2020, EEA nationals will need at least pre-settled status to claim CTS. Local authorities may be able to help - people with no recourse to public funds can now get LA homelessness support. LAs may also be able to signpost to local charities and mutual aid groups.
  37. 37. 373737 Over to Peter How organisations are responding
  38. 38. Who are your vulnerable groups?
  39. 39. Identify Engage Track People who need your support the most Your residents with targeted support The impact of policy and effectiveness of interventions
  40. 40. LIFT summary
  41. 41. Focus on one cohort
  42. 42. Identify to street level
  43. 43. Identify to household level
  44. 44. Download data for further analysis
  45. 45. Track outcomes over time
  46. 46. Track cohorts over time
  47. 47. Understand a household’s journey
  48. 48. Show the situation in the calculator
  49. 49. Show the situation in the calculator
  50. 50. Show the situation in the calculator
  51. 51. Should I move to Universal Credit?
  52. 52. Further guidance
  53. 53. Self-serve Benefits and Budgeting Calculator to triage customer support
  54. 54. 545454 Questions and answers
  55. 55. ● For up to date information on the welfare support available see ● Our basic Benefits Calculator is listed on and is free. Whilst it doesn't have the built-in features to help all frontline advisors give the best support they can, it is as accurate and simple to use. Access the free Benefits Calculator ● Self-serve calculator to triage customer support ● Follow up email with webinar recording and slides, with links ● Short survey to follow ● Next webinar: Coronavirus: stories from the frontline with Ellie Kershaw, LB Tower Hamlets and Grant Bailey, Cheltenham Borough Homes, on Wed 20 May at 10:30 Practical tools that can help
  56. 56. 565656 Thank you Victoria Todd, Low Incomes Tax Reform Group (LITRG) Zoe Charlesworth Megan Mclean Peter Carter Policy in Practice 0330 088 9242