How Does Furlough Affect Working Tax Credits and Housing Benefit?

Normally you would need to let HMRC know if your hours increase or reduce, as this affects your entitlement to Working Tax Credit. Currently you only need to notify HMRC if you’re working hours change permanently. You do not need to tell them if this change is only temporary.

We would always recommend that you get a benefit check carried out.

See below for guidance.

A TEMPORARY REDUCTION IN YOUR WORKING HOURS
You will be treated as continuing to work your normal hours for at least 8 weeks and there will be no change to your Working Tax Credit payments during those 8 weeks.
You do not need to tell HMRC about this temporary reduction. However, you will need to check if the 8 week period is extended. If not, you will then need to notify HMRC about the change.

TEMPORARILY LAID OFF (NOT FURLOUGHED)
Your employer does not have enough work for you but intends to recall you when they have.
HMRC will treat you as working your normal hours for at least 8 weeks. However you should consider getting a benefit check as you may be entitled to claim Universal Credit, especially if you have housing costs.
You do not need to tell HMRC unless you’re lay off becomes permanent or you are made redundant.

FURLOUGHED
You need to agree with your employer to be furloughed. Furloughed normally means that you were laid off without pay. However, the Government have introduced Job Retention Scheme. Your employer must show that they are affected by the current Coronavirus situation and that there is a guarantee that you will still have a job at the end of the furlough period. You must have been on the payroll of the company before March 19th to be furloughed.
You will be paid 80% of your normal salary up to a maximum of £2500.00 per month. HMRC will treat you as working your normal hours and your working tax credits will be paid at the same amount for 8 weeks.
You do not need to tell HMRC that you have been furloughed, however, at this time it is not known whether you need to report the change after the 8 weeks.

PERMANENT CHANGE OF WORKING HOURS
If your employer reduces your working hours on a permanent basis, this may reduce, or remove any entitlement to Working Tax Credit. If you no longer qualify for Working Tax Credit, you may get a four week run-on of Working Tax Credit.
However, it would be advisable to have your benefit checked to see if you would be better off on Universal Credit.

HOUSING BENEFIT
For each scenario above, if you are in receipt of partial Housing Benefit and your income decreases, then your Housing Benefit may increase. You will need to notify Housing Benefit of your change in circumstances.
If your income reduces and you are not in receipt of housing benefit, then you may need to apply for Universal Credit to cover any housing costs instead.
We advise getting your benefits checked to see if you have any entitlement.


Frequently Asked Questions

Question:
I have a basic salary and am paid an additional amount for unsociable hours.
If I am furloughed will I only receive 80% of my basic salary?

Answer:
If the unsociable hours are compulsory as part of your contract of employment, then the answer is no. You should receive 80% inclusive of the unsociable hour’s payments.

Question:
I have a low basic salary and my work is commission based. My employer is furloughing me on my basic salary. Is this correct?

Answer:
Commission payments can be included as long as they are compulsory commission payments and are regular.

Question:
I am on a zero hours contract. Can I be furloughed and what would I receive?

Answer:
You can be furloughed as long as your employment has been severely affected by the Coronavirus, you are registered with your employer for PAYE and you have been working for them before 28th February 2020. If your earnings vary, your salary will be based upon the same month’s earnings from a previous year or the average monthly pay for the tax year 2019 -2020. You will be paid 80% of whichever is the highest amount.

Question:
I have two jobs, one of them wants to furlough me but I will still be working in my second job, how will that work?

Answer:
You can be furloughed from one job while working for the other employer. You will receive 80% of your normal salary for the furloughed post.

Note: if you have two jobs, you can be furloughed for both of them and would receive 80% of your normal salary for each job. You must have been registered with both employers for PAYE and have been working for them before 28th February 2020.