Coronavirus benefit changes: an update

Tom_maggies Tom_maggies
Monday 11 May 2020
  • Coronavirus
  • Finance and benefits

A catch up of what has changed since companion blogs  - see in links below - were posted. While these have been updated separately, this run through of the latest changes may help as a quick catch up and updater. 

In this blog I run through the changes to update my original blogs on benefit changes and the 80% schemes. I have also updated the content in those blogs too, but I thought a quick rundown of what has changed since might be an useful updater.

The pace of change has been fairly relentless with a need for quick changes and fixes quick in the traditional benefits system and the need to flesh out the detail in the very new temporary HMRC "80%" schemes, as detail has been added and processes developed. 

.

.

The main benefits system

DWP have faced a challenge from

  • needing to move away from usual face to face interview and assessment processes; and 
  • a huge surges in new claims and stretches to the telephone based processes as phones melted.

.

Avoiding face to face interactions

  • All scheduled health re-assessments that were due to come up after 23rd March  - for  “disability benefits” such as Personal Independent Payment (PIP)  and “sickness benefits” such as Employment and Support Allowance (ESA) and Universal Credit (UC)  for those claiming when unwell  - have been suspended for 3 months and this may continue   
  • Your current award of any of those benefits will be automatically extended for six months if a renewal or review was due after  23rd march       
  • The DLA to PIP transfer is on hold across the UK and will not now be completed until 2021 and possibly later. The aim is that these will become DLA to Disability Assistance in Scotland, but this will on new timetables for introudcing the new kinder, gentler Scottish equivalent. 
  • Similarly the four different review of PIP awards going on are on hold 
  • If you are making a new claim for disability or sickness benefits, then assessments will still take place – when required - but will be done via a telephone assessment
  • many people with cancer will continue to by-pass the Work Capability Assessment (used in ESA and UC (on grounds of limited capability for work) because of “awaiting, receiving or recovering from” cancer treatments.
  • Local Jobcentre Plus offices are closed so processes requiring attendance at local offices are suspended. Ongoing contact around “work requirements” for Universal Credit and Jobseeker’s Allowance will be via online UC journals and telephone contacts
  • Those work requirements – none of which would apply if you are in the ESA support / UC LCWRA group after a cancer diagnosis or if you are a carer – have been substantially reduced in the present labour market conditions.

.

Easing pressures on DWP telephony

With local offices closed and an unprecedented number of new claims for Universal Credit (UC) - the general safety net benefit – being made, DWP telephony resources have been stretched. The DWP are offering more options to claim benefits online and reducing the normal steps of needing to make a call as part of your claim.

Important benefits for people affected by cancer that can now be claimed online include:

  • Employment and Support Allowance ESA – the guidance keeps changing. Originally the solution was for people just claiming ES(without a toppp up from UC) to claim online while those claiming both should claim ESA by making a jan entry in their UC journal. But UC lacks the capacity for this separate route so now everyone is directed to online. The problem is that the form asks if you are claiming UC as well and if you are sends you off on a tangent and unable to complete your claim. UC advice was to say no to rhat question so you can proceed with the claim. Check the latest official advice on How to claim ESA  
  • Pension Credit (PC): this important top up to other pension income is missed out on by 40% of those entitled. Research has found the main reason is that people do not realise that they are eligible. Many people with cancer may find that other benefit claims  can bring them into entitlement for PC for the first time, when they might not have been entitled to PC before. You can now also claim PC online, but can also continue to do so by phone or by post. See How to claim Pension Credit

.

Don’t call us, we’ll call you…

... is the message from Universal Credit. UC  was overwhelmed by over two million new claims from people whose income from work has suddenly been stopped since the Covid 19 lockdown began.  The normal claims process requires people to complete their claim online but then ring within seven days  ring to book an appointment at their local Jobcentre Plus office, for verification of your ID and to agree a Claimant Commitment.

Instead, UC will contact you via text or e-mail if they need to speak to you around any queries with your online claim 

The need for – and/or duration of - such a telephone session may be reduced by:  

  • normal Claimant Commitment “work requirements” being largely suspended, so that the general claimant Commitment you accept when you make an online UC claim will usually cover it.
  • by accepting any pre-existing online Government Gateway ID as verification for UC
  • You may very well need an Advance Payment to tide you over the first 5 weeks until your first UC payday. You can now now apply Online, via your UC online account. 

Ministers have decided that they don't want to extend these closures, and have slightly pre-announced the re-opening of Jobcentres for appointments for claimant commitments and following up on any work requirements. These may not be required anyway for many people affected by cancer. This came as news to local DWP managers, and this has now become a gradual roll out of the re-opening, with an assurance that of course any requirements will reflect the very abnormal jobs market at the moment, but that sanctions could potentially apply.  

If you are making a new claim for UC or New Style ESA, you should get current information about where things stand in your area and the next steps you need to take. Should any interview be necessary,  it should be a telephone appointment . You should not leave the house to attend a JobCentre while you need to be "sheltering.

.

Benefits and Covid-19 isolation

People with cancer  and carers of someone receiving one of the “disability benefits" can access benefits on the basis of being unwell or being carers at basis anyway. They can also access the more general help - via cash top ups or help with specific costs - available to anyone on a low income. 

But others in your household may have to stop work when following Government advice around Covi -19  "self-isolation" and "shielding". The main benefits that cover this situation are the "sickness benefits" of Statutory Sick Pay (SSP), Employment and Support Allowance (ESA) and Universal Credit (UC) -when claimed on grounds of sickness

The latest update of new criteria for claiming these benefits, mean that these are payable:

  • without waiting days for SSP and ESA, with employers refunded for the first 2 weeks of SSP 
  • with claimants being "treated as" having “limited capability for work” for UC and ESA and as meeting the SSP criteria
  • without any assumed UC "Minimum Income Floor" if you are self-employed - 

so long as you are self-isolating or shielding under Government advice. The evidence for this is usually either an online self-isolation note or the letter sent to "extremely vulnerable" groups.

The health guidance is a little hazy about what others in the household are meant to do if they live with someone who needs to shield. Mainly there is good advice on social distancing arrangements within the home, but there could be situations where a worker - particularly at risk of catching coronavirus -  might be specifically medically advised to join someone in shielding.

There may be room to get that covered under sickness benefits as above. Or alternatively,  to be furloughed under the Job Retention Scheme.

NB: the original help to the self employed of not applying the "minimum income floor" first applied only to Covid -19 breaks from earning only. It has now been widened to include all claims from the self employed

.    

Carers and Covid 19

  • You are not counted as having a break from caring if you are stopped from doing so because of self-isolation or shielding, so you can continue to receive Carer’s Allowance. The 
  • Carers in Scotland will be receiving an extra Carers Allowance Supplement. This is normally an extra amount to top up the UK wide Carer’s Allowance to the equivalent of £74.35 a week. However, an extra payment of this 6 monthly supplement is being paid in recognition of the extra workload created by Coronavirus.

.

.

Other Benefit changes

.

Universal Credit

  • The standard allowances used in working out Universal Credit have been increased by £86.67 a month, so that the basic single over 25s rate matches the amount for SSP.  This will apply for this year only.
  • However, there is no equivalent increase in the “legacy benefits” except for an extra £1,040 a year in the basic amount of Working Tax Credit and a matching increase in the extra earnings disregard for WTC claimants within Housing Benefit.
  • Claimants who do face work requirements within UC e.g. workers, the unemployed, the less unwell people with health issues, will have found these are on hold, but they are now going to be re-introduced (along with possible sanctions) in a phased re-opening of Jobcentres. Local managers and staff are scratching their heads at how to make this happen safely, and as to how these will apply in practise. 
  • UC will not be recovering any overpayments for the time being, but say that it is not operationally possible to halt recovery of Advance Payments (the interest free loans to tide people over the first 5 weeks on UC as you wait for the first payment)
  • The Government is not acceding to widespread  calls to drop arbitrary limits such as the benefits cap (in UC and HB) and  the “two child limit” within UC or Child Tax Credit.
  • However, the limit on private rents – called the Local Housing Allowance within UC and Housing Benefit – has been raised significantly, so that it is back to covering the bottom 30% of rents available in an area.
  • DWP are now more actively warning people, that a claim for UC – whether or not anything comes of it – will end tax credit and other legacy claims. This is a big issue for many who are self-employed looking for extra help to tide them over until the HMRC 80% of profits scheme pays out. The trouble is that there is no way back to tax credits and other "legacy benefit"s once a claim for UC is made. The Government has said they will look at the issue.
  • Recent evidence sessions before the House of Commons Work and Pensions Committee also point out a real danger in HMRC's habit of raking up any old past overpayment of tax credits and rolling this up into a debt dumped on your UC claim. Often this may be the first people may have heard about this. Get advice if this happens to you. 
  • Other concerns were the failure to have invested in Universal Support as the full back up support for pro-active support to UC claims, and an insight to the issues around changing the ways UC does things. You can see the evidence session here

.

.    

Tax Credits

  • You can remain on tax credits even if you are furloughed or self-employed work has dried up. HMRC are waiving the normal hours requirements for Working Tax Credit
  • There is an extra £1,040 in the basic amount for Working Tax Credit and there is also an extra £20 in the amount of earnings ignored if you are also claiming Housing Benefit (HB)
  • The amounts of tax credit are normally calculated over a year, but if you think your income will be rather lower in the coming tax year than it was last year then payments could increase. And if amounts last year was less than expected, this can be reflected in a an extra settling up of tax credits for the last year.
  • Tax credits has quite a wide range of discretion when it comes to counting hours "normally worked" for the purpose of its hours rules, so HMRC have said that they you will remain treated as working your normal hours, through any temporary disruption caused by the lockdown 
  • This can be a good time of year for tax credits to step up and help, although its original ability to do so has been rather weakened by cuts to it  that means WTC has to ignore the first £2,500 a year of any drop. 
  • A similar cut was made to the amounts ignored when income rises, which has brought back the previously largely banished spectre of overpayment issues at the end of the tax year. A campaign is underway, led by Sir Ian Duncan Smith the founding father of Universal Credit, to stop HMRC's current practise of digging up all overpayments (some of which they have done nothing about) and dumping them as a debt whto be recovered via UC, when you transfer.

.

.

Other legacy benefits

  • There are important changes in the eligibility criteria for Income-related ESA and Income-based JSA around Covid -19 related absences, as described earlier.
  • Legacy benefits are not getting that extra £20 a week Covid-19 supplement. You could explore claiming UC instead to get at that support, but do get advice first. This could be a straight “win” with other gains too. However, switching over now could come with other losses, leaving you worse off overall.
  • Housing Benefit will have that extra income disregard for workers who claim Working Tax Credit and can help with private sector rents to higher limits

.

Scottish benefits

  • Remaining people still awaiting a call to transfer from Disability Living Allowance (DLA) to PIP will no longer get letters inviting a claim for PIP – as per the rest of the UK. However, these letters will not resume. Instead, people will get an invitation from Social Security Scotland to claim Disability Assistance (in working age) instead.
  • The same PIP points process will apply – so that people claiming PIP in Scotland can easily be moved over - but the intention is to run a quite different claims, renewals and assessment process
  • The Scottish Welfare Fund – that took over from the “discretionary social Fund has had its budget doubled and the limit on three applications in a year has been waived
  • A separate fund has been set up to help self-employed people who are not eligible for the Self Employment Income Support scheme
  • Carers in Scotland will get an extra payment of the six monthly Carers Allowance Supplement as an acknowledgement of their added responsibilities
  • The timetable for the roll out of further Scottish benefits has been altered and put on hold.

.

.

The HMRC schemes update

.

The Coronavirus Job Retention Scheme (CJRS)

  • Later guidance has extended what people on furlough can do – they can act as carers or work with other companies.
  • There have been calls to allow some working with your current employer as allowed under equivalent schemes in other countries, in particular in relation to the charity sector, where demand for services are as high as ever, but income has dropped away.
  • Businesses had to continue paying workers as normal but could just pay the 80%. Business Interruption Loans were meant to be there to help businesses with cash flow problems, but confusions between banks and the Government about the criteria to be applied, mean that these loans have been slow to come out.
  • A portal is now open for employers to claim their refunds at this HMRC Claim for wages through the CJRS and payments have started to be made. 
  • The Scheme is now being extended: originally for a month to the 30th June , but now, on current terms until the 1st August. 
  • After that there will be a tapering off arrangement. Details will follow but the broad idea is that employees who have been furloughed would be allowed to do some work that provides business income or services to their employer, while the amount of wages paid by the Government will reduce from the current 80% . This phased roll off will continue until the 31st October, when the scheme is intended to end.

.

The Self Employment Income Support Scheme (SEISS)

  • This took a little later to work out because of the complications involved in designing a scheme
  • If you are self-employed you will have recently received letters announcing that the online system is open and how you can check your eligibility and make your application at this HMRC webpage. Payments will follow usually within 6 days. 
  • Payments will cover the period 1st March to the 1st June.  You have until the 13th July to apply for the first payment . Applications for a second payment will open from the 17th August on the same terms as the first. If you miss the first you can still apply for the second. 
  • If you have been affected by cancer during these times, you may mistakenly think you cannot apply, as your ability to earn will have been put on hold by illness or caring. However, the point is not your current working ability but whether your business has been trading during these times and if it would have been affected by the Covid lockdown. 
  • If in doubt it is a very quick process to check eligibility and see how much you will get and make that claim . See Check if you can claim SEISS.
  • Having claimed other benefits such as UC or ESA while waiting, does not stop you being eligible for claiming a SEISS payment .  However there may be an impact on other benefits when you actually receive a SEISS payment. See more details below. 

.

.

Other help for the self-employed

  • Scotland has an additional fund to offer some support for self employed people ineligible for this UK wide scheme.
  • If you are not eligible for the SEISS scheme - or have been waiting for your payment -  there is and has been support from the main benefits system. 
  • For those totally new to means tested benefits, then  it is simpler in that means tested support would come from Universal Credit.

For some self employed people who may have been receiving benefits before  - such as Working Tax Credit or Housing Benefit - there is a choice between: 

  • a) seeing how your existing benefits could increase to take into account of lower business income and make a new claim for ESA or Carers Allowance or PIP ; or
  • b) switching over to Universal Credit instead.  Get advice before you claim UC as "once on UC, you stay onUC" . There is a risk that extra short term help from UC during the crisis might mean a loss later on, if UC would be a worse option for you in nor,al times. But UC might also do better now and in the long term too. So do seek advice.  
  • The DWP only started issuing warnings late into the rush of application and the Secretary of State has promised to look at ways of allowing people to go back under these limite circumstances.
  • But NB:  you can make a claim for New-Style ESA without having to switch any other benefits over to UC e.g. you can get New- style ESA either alongside Working Tax credit and Housing Benefit , alongside Universal Credit or on its own. The same applies to Carer's Allowance and Personal Independence Payment. All three are separate benefits that stand outside of the process of switch over from legacy benefits to UC.

.

.

How will a SEISS payment affect benefit payments ?

While having claimed a benefit does not prevent you getting a SEISS payment, the arrival of that payment will have n effect on some benefits . For means tested benefits, the Government have announced that: 

  • for Universal Credit (UC) : your SEISS payment will count as earned income in the month that you receive it. Depending on the amount you get, this could be enough to knock you off UC for that month, but you can do a rapid reclaim to restart your UC claim for the next month. 
  • for Housing Benefit (HB): your SEISS payment is also treated as self employed earnings but can be averaged out in the normal way. Often HB do this over the past 12 months for the self employed, so the effect will depend on how much SEISS payment you get and how your usual business income has been affected. 
  • for Tax Credits:  While not a special announcement , SEISS is part of your taxable income for the year so it will in the assessment  for this year's income just as it would could count in your tax returns for 2020/21 . So there is no immediate impact, unles you are asking HMRC to re-assess your tax credits for the current year because you expect income to be much lower  
  • for New Style Employment and Support Allowance: it will not count as earnings if you have not been earning during your claim. If you have it will be averaged out and added to any permitted earnings and this may or may not affect the ESA due.
  • it is not yet clear what the impact would be for Carer's Allowance -I will update when we know. For now do get advice as arguably it should be the same principle as for ESA.  

.

.

Links and further reading

.

Related blogs: