CPAG in Scotland Tax Credits Project: Factsheet 19
Tax credits and flexible working
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Example |
How does being a term-time worker affect a WTC award?
In calculating WTC, income is not averaged on a weekly or monthly basis. It is annual income paid during the whole tax year that is taken into account.
Example |
What if a term-time worker is unpaid during holidays or other breaks?
Even if you are being paid WTC (and CTC) during the school holidays or other breaks you may find it difficult to manage, if you are not paid any wages during that period. In this case, you might be able to sign on and claim jobseeker’s allowance (JSA).
To qualify for JSA, you must not be in full-time paid work. This means you must do less than 16 hours work per week (and your partner must do less than 24). The rules for JSA work differently from WTC. For JSA, the hours you work are averaged over the whole work cycle including periods when you do not work, but disregarding weeks when you are on paid holiday or absent from work because of illness, on maternity, paternity or adoption leave or absent from work without good cause. If your hours are low enough, you count as not in full-time paid work throughout the cycle.
Example For JSA purposes, the hours are calculated differently: 20 hours X 40 weeks = 800 hours. There are no weeks to be disregarded. So: Mel is doing less than 16 hours per week, so she can claim JSA. Earnings affect the amount of JSA she can get, and for income-based JSA, any WTC she is paid is taken into account as income, so her income is unlikely to be low enough during periods when she is being paid. However she might qualify for JSA during the summer holidays. |
Other seasonal workers
Other seasonal workers may be employed in leisure, tourism or agriculture. The term-time worker rules may apply to other seasonal workers, but only if the Revenue recognises that you have a cycle of work lasting a whole year with similar breaks to school holidays.
Seasonal workers who work for less than one year or have longer breaks than school holidays are not covered by the term-time worker rules. If you have a temporary contract to work only part of the year, such as fruit-picking or over Christmas, you will not count as a worker during the other times of the year when you do not work. As long as the work is expected to last at least four weeks, you can claim WTC during the period you are working.
Temporary and agency workers
Temporary workers can be entitled to WTC as long as the work is expected to last at least four weeks. If you are employed by an agency, you can qualify for WTC for the period in which you are actually working if expected to last at least four weeks. It is not sufficient simply to be registered with an agency and available for work, you must actually be working. Depending on the terms you have agreed, your employer in these cases may be the company you are working for, the agency itself or you may count as self-employed. It is very important to notify the Revenue if you stop work. Due to the rules about gaps between jobs and stopping work, it may be possible to qualify for WTC continuously if you start work again within a short period.
Variable hours
Your hours of work are the hours that you normally perform, not necessarily the hours stipulated in your contract. This includes paid meal or tea breaks. Your normal working hours may include overtime. Paid time off for medical appointments can also be included if you have a disability.
In practice, the Revenue may tend to use an average number of hours over a cycle of weeks. There is no requirement to work 16 hours in every week, and no hard and fast rule as to how many weeks should be taken into account. All the circumstances, including the expectations of employer and employee should be considered, using common sense.
You may encounter difficulties with WTC if your working pattern varies for any reason, or if you do not know from one week to the next how many hours a week you will be working. The safest route in these cases is to report your actual hours worked to the Revenue every four weeks.
Starting work
To claim WTC, you must be in work, or have accepted a job offer and the work is expected to start within 7 days. You can be treated as in work and get WTC for the 7 days between your claim and your job start date, as long as you do actually start work. In addition, the work must be expected to last at least four weeks.
The work must be done for payment or in expectation of payment.
Gaps of no more than 7 days between jobs
You can still be treated as working if you stop one job and start a new one within 7 days. In this case, you should be continuously entitled to WTC and it is not necessary to make a new claim.
The Revenue likes to be kept informed of your employer’s details and this may become relevant if there is an investigation into your claim for any reason. However, you should not face a penalty for failing to report a change in employer as long as you have not actually stopped working for more than 7 days.
Stopping work (four-week run-on)
You are still treated as working and entitled to WTC for four weeks after stopping work, or if you stop working the required number of hours to qualify for WTC (16 or 30, depending on your circumstances).
It is very important to notify the Revenue if you stop working as failure to do so can result in a penalty of up to £300 and an overpayment.
Laid off
You are ‘laid off’ if your employer cannot provide you with work because of a downturn in business. If this is permanent, then you have lost your job or been made redundant. If you are laid off temporarily, your employer keeps your job open for you to return to when conditions improve. If you are temporarily laid off by your employer, whether or not you are still treated as working for WTC purposes depends on the precise circumstances, including whether you are still under a contract of employment, but the Revenue states common sense should be used.
If you are laid off until further notice, and your employer cannot give you a date when you are expected to return to work, then you are treated as having stopped work and you will be entitled to the four-week run-on only.
If your employer has laid you off temporarily and tells you that you are expected to return to work by a certain date, you may still be treated as in work. However, if you have not returned to work within eight weeks in total, it is likely that your entitlement will end.
In all cases, it is important to be clear on the likely date of your return to work and when you are notified of this by your employer. It is vital for you to notify the Revenue and keep them informed of the situation at least every four weeks, or as soon as you are told anything different by your employer.
Example On 5 June 2010, he goes in to work. His employer does not know if John will be able to go back to work at all. John calls the Tax Credit Helpline to tell them the lay off is now indefinite. He is now treated as having stopped work, so qualifies for the four-week run-on allowing him to get WTC up to 3 July 2010. |
Periods when you are treated as in work
There are other situations where even though you are not actually working, you may be treated as in work and still entitled to WTC.
- Holidays: You are still treated as in work while you are on paid holiday and other recognised customary holidays even if unpaid, such as Christmas Day.
- Sickness: You are still treated as in work while receiving statutory sick pay or other specified benefits for up to 28 weeks.
- Maternity, paternity and adoption: You are still be treated as in work while you are paid statutory maternity pay, statutory adoption pay or maternity allowance (these last up to 39 weeks), or statutory paternity pay (up to 2 weeks).
- Strike: You are still treated as in work while you are on strike for no more than 10 days in a row, or during a series of one-day strikes, as long as you are working in between. On the 11th consecutive day of strike action, you are treated as having stopped work.
- On duty: You are treated as working while ‘on duty’, ie, required to be at premises other than your home, even when no actual work is done during the period. For example, a fire-fighter on duty at the fire station is working, even if not called out to a fire.
- Suspensions: You are still treated as in work if you are suspended from your job while complaints or allegations are being investigated. There is no limit to the period of time for which this may apply, and it does not matter whether you are paid or not.
Periods when you are not treated as in work
There are other situations where although you may still have a contract of employment, you are not treated as in work for WTC.
- Unpaid leave: You are not treated as in work while you are on unpaid leave for any reason. This may include carer’s leave, parental leave and sabbaticals. You will be covered by the four-week run-on after stopping work but no longer.
- On call: You are not treated as working while you are ‘on call’, ie, you are available to be recalled to duty and private activities are restricted. For example, a residential social worker may receive a payment to keep their phone on and be ready to return to their workplace if needed, but is not treated as working unless called upon.
- Pay in lieu of notice: You are not treated as in work if you have stopped work and are receiving pay in lieu of notice. You will be covered by the four-week run-on after stopping work but no longer.
Appeals
If you disagree with the Revenue’s decision about whether you are working or should be treated as working, or about the number of hours, you have the right to appeal to the independent First-tier Tribunal. You can appeal a decision about WTC and continue to receive child tax credit. You should appeal within 30 days of the decision. To appeal a decision about entitlement to tax credits or one of the elements, complete the Revenue’s form WTC/AP. For more information, see CPAG in Scotland’s leaflet, Tax credits – challenging decisions.
Further information and advice
CPAG in Scotland Tax Credits Project summary webpages
Child
Poverty Action Group in Scotland
0141 552 0552 advice line for advisers on benefits and tax credits,
Monday, Tuesday, Wednesday and Thursday 10am to 12 noon
Email: advice@cpagscotland.org.uk
email advice for advisers on benefits and tax credits
Website: www.cpag.org.uk
for more tax credit leaflets from CPAG in Scotland
CPAG
publishes the Welfare
Benefits and Tax Credits Handbook, a comprehensive guide
to benefits and tax credits for claimants and advisers.
CPAG in Scotland’s advice line is only for advisers. If you are having problems with your own tax credit or benefit claim and are in need of advice you should contact your citizens advice bureau or other local welfare rights service.
HM Revenue and Customs
Tax Credit Helpline 0845 300 3900
(textphone 0845 300 3909)
Website: www.hmrc.gov.uk
© Child
Poverty Action Group, April 2010
CPAG in Scotland’s Tax Credit Project is funded by the Scottish
Government.
Child Poverty Action Group is a charity registered in England and Wales (registration number 294841) and in Scotland (registration number SC039339). Company limited by guarantee registered in England (registration number 1993854). Registered office: 94 White Lion Street, London N1 9PF
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