Coronavirus - Financial help for individuals
Recent Government announcements – extra help
On 20th March the Government outlined a package of measures to protect people’s jobs and incomes as part of the national effort in response to coronavirus.
- Local Housing Allowance inrease
- Universal Credit
- Tax Credits
- Council Tax Hardship Payment
- Job Retention Scheme(Furlough payments)
- Self-Employed Income Support Scheme (SEISS)
- Other support
Local Housing Allowance Increase
The Local Housing Allowance is the maximum amount of help that people renting from a private landlord can claim from Housing Benefit or Universal Credit.
From April 2020, for one year, Local Housing Allowance (LHA) rates will be set at levels that mean housing support from the benefits system is sufficient to cover 30 per cent of all rental properties in the local area. This has not been the case since 2012 and will mean that the number of private rental properties that are affordable to people on Housing Benefit or Universal Credit will increase.
The new amounts for Northampton from April 2020 are likely to be as follows;
Room in a shared house
Local housing allowance LHA rates applicable from April 2020 to March 2021
Please note, we have not been told what will happen to these rates from April 2021. There is no guarantee that they will remain at this level.
From 6 April the government is increasing the standard allowance in Universal Credit by £20 per week. This will apply to all new and existing Universal Credit customers. This means that for a single Universal Credit customer (aged 25 or over), the standard allowance will increase from £317.82 to £409.89 per month.
The government has announced that Working Tax Credits payments will be increased from 6 April 2020. More about what's happening and who this affects can be found on the gov.uk website.
Council Tax Hardship Payment
The Government has announced that they will be giving Northampton Council an extra £1,861,318 to help people who are receiving help with their Council Tax bill through a Council Tax Reduction
- If you have applied for a Council Tax Reduction or are already receiving a Council Tax Reduction you will not have to do anything else to receive this help. We will not take into account whether you have been affected by COVID-19 either directly or indirectly in assessing eligibility for this reduction.
- If you are not already receiving a Council Tax Reduction and need help with your Council Tax bill because you are finding it difficult to manage financially, please apply for Council Tax Reduction in the normal way. Any extra help will be given automatically.
The Government has asked the Council to reduce the bill for everyone who is working age and receives a Council Tax Reduction, at any point in this financial year, by up to £150.
The financial year starts on 1 April 2020 and ends 31 March 2020. The hardship payment will be lower for people who do not start to receive a Council Tax Reduction until later in the year.
If your bill is already less than £150 a year the bill will be reduced to nil. If your bill is already nil, no additional award will be made.
We will be processing this additional reduction in stages.
- Stage 1: If you were receiving a Council Tax Reduction on 1 April 2020 and are still receiving a Council Tax Reduction you will have received a new lower Council Tax bill around 15 May 2020.
- Stage 2: If your Council Tax Reduction started after 1 April 2020 or you are jointly liable for Council Tax with someone who is not your partner you will receive a new lower bill around 10 June 2020 or when your Council Tax Reduction is applied to your bill.
Job Retention Scheme
On 20th March 2020 the government announced a new 'Coronavirus Job Retention Scheme’ that aims to support businesses to help pay people’s wages.
Employers can now contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working during the Coronavirus outbreak. The Scheme is now open for applications. A simple, step-by-step guide is available for employers on GOV.UK.
How it works
Employers will need to:
- Designate affected employees as ‘furloughed workers,’ and notify each employee of this change.
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (still in development)
HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 gross per month.
i.e. the employer will need to make the wage payment and then apply for a reimbursement. If the employer needs short term cash flow support, they may be eligible for a Coronavirus Business Interruption Loan.
If you are an employer you can find up to date information at Gov.uk Claims guidance for employers<
If you are an employee, you can find more information and check if you could be covered by the Coronavirus Job Retention Scheme at Gov.uk guidance for employees
The dictionary definition of a 'furloughed worker', is one who has been granted a leave of absence; it is 'temporary leave of employees due to the special needs of a company or employer, which may be due to economic conditions at the specific employer or in the economy as a whole'.
The information published so far about the Job Retention Scheme suggests it will only apply to those employees who are not working due to the Coronavirus, to help safeguard their job. There therefore appears no system in place – apart from the benefit system – for those workers on reduced hours. This may change in the future, but for now we assume this approach.
Self-Employed Income Support Scheme
On 26th March the government announced its proposal for supporting the self-employed during the Coronavirus pandemic.
The government will pay self-employed people, who are eligible for the scheme, a taxable grant in two instalments
Payment 1: Worth 80% of average monthly profits over the last three years, up to £7,500. If you’re eligible and have not already claimed the first grant you must on or before 13 July 2020.
Payment 2: Worth 70% of average profits over the last three years, up to £6,570. The full entitlement (covering three months) is payable in one instalment in August and is fully taxable as income.
Payments 3 and 4: A further extension was announced on 24 September 2020. More information on this extension to the scheme can be found on GOV.UK
An initial taxable grant will be provided to those who are eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
- The 3rd lump sum payment will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
- An additional 4th grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April 2021.
Who will get this help?
The scheme is open to those who:
- Are already in self-employment, who have a tax return for 2018/2019, and
- Who have average annual trading profits of less than £50,000 pa, and
- Who have lost trading / profits due to COVID-19, and
- Whose self-employment makes up the majority of their income.
HMRC contacted people who they think may be eligible directly during the week beginning 4th May 2020. Anyone contacted is asked to use the eligibility checker available on gov.uk. This is open to anyone to use, not just those who have been contacted by HMRC.
After checking eligibility, the applicant must either log into or create their government Gateway account, where they will be presented with a calculation of the amount of the grant and asked to fill out a simple online form, complete the declaration and supply the bank account details into which they would like the grant to be paid.
The applicant does not need to provide any information about their income as the calculations are all done by HMRC based on the tax returns submitted. HMRC will check the claim and expects to make payments from 25th May 2020 or within six working days of the application being submitted.
Applicants should keep a copy of the calculation and a record of the claim reference number. It is also important to keep evidence that the business has been adversely affected by Covid-19, such as business accounts showing a reduction in turnover, confirmation of any Covid-19 related business loans, dates the business had to close due to lockdown restrictions and dates the applicant or their staff were unable to work due to Covid-19 symptoms, shielding or caring responsibilities due to school closures.
Who can't get help?
The following self-employed workers will not be able to receive the grant:
- Those who started their self-employment on or after 6th April 2019, as they will not have submitted a tax return for 2018/19
- Those with average annual trading profits (loosely your taxable profits) of £50,000 or more.
- Those who are also employed and their employed income is higher than their self-employed income.
Company directors who pay themselves a salary or dividends won't be covered by this scheme, but they could get support through the Coronavirus Job Retention Scheme for employees if they operate a PAYE scheme.
Impact on benefits
The grant payment will be treated as earnings for benefit purposes.
On the government's business support website it states: The grant is recognised as income for the purposes of Universal Credit and Tax Credits and may impact the amount claimants are entitled to.
For Housing Benefit and Council Tax Reduction; If you receive the grant your Housing Benefit and Council Tax Reduction award will be recalculated to take it into account as income from the date it is paid for the next 3 months. For example, if you receive a grant of £3,000 on 1 June 2020, we will take this into account as earnings of £1,000 a month in June, July and August. if you are doing less work or not working at all, we will assume that most of your expenses connected with your self-employment are reduced or nil, unless you have told us otherwise.
Tell us about any changes to your expenses
If you receive the Self-Employed Income Support Scheme grant from HMRC or your earnings change, you must tell us straight away. Report the change to your earnings on our website
More information on the Government grant for people who are self-employed can be found at www.gov.uk.
Policy in Practice have created a welfare support page Your income and Coronavirus (COVID-19) to clearly show what support you might get if your income is affected by Coronavirus. The page is updated as and when changes are announced by the Government. Information is provided on what to do if:
- You are self-employed
- You are paying rent
- You are paying a mortgage
- Your child qualifies for Free School Meals
- You have a prepayment meter
- You pay Council Tax