Lancashire residents could be eligible for a £500 one-off tax credit payment
The new one-off payment from HMRC was introduced to provide extra support during Covid after the temporary increase in working tax credit ended
Working households across the UK could be eligible for a new, one-off £500 payment from HMRC.
People who receive tax credits may be entitled to receive the payment - introduced to provide further financial support after the temporary increase in working tax credit ended - in April.
The payment was announced as part of the Chancellor Rishi Sunak’s 2021 Budget in March.
The £500 one-off payment was announced as part of the Chancellor’s 2021 Budget.
Tax credit claimants were given extra support early last year due to the pandemic, with standard rates increased by £20 a week.
So, who is eligible for the £500 sum and when will it be paid?
Here is everything you need to know.
Who is eligible for the payment?
You may get a one-off, tax-free payment of £500 if, on 2 March 2021, you were receiving either:
- Working tax credit
- Child tax credit and were eligible for working tax credit but you did not get a payment because your income is too high.
Do you need to apply for the payment?
Those eligible to receive the payment will not need to contact HMRC to apply.
Instead, you will receive a text message or letter from them in April to confirm your eligibility.
The text message will read: “HMRC: One-off £500 payment by 23 April for working households receiving tax credits – it's automatic so no action needed. Search 'one-off payment' on GOV.UK.”
It is important to note that messages sent by HMRC will not include a link, and no action needs to be taken to receive the £500.
Eligible people should be aware of scammers, the government has warned, who may mimic HMRC messages in a way that appears authentic.
When will the £500 be paid?
HMRC has said those who are eligible will receive the payment directly to their bank account by 23 April 2021.
It will automatically appear in the same bank account that your tax credits are usually paid into.
The payment will not appear on the online tax credits service.
Instead, claimants should check their bank records for the reference “HMRC C19 Support”.
It is aso non-taxable, and you will not be required to declare it as income for self-assessment tax returns or credit claims and renewals.
Additionally, the one-off payment will not impact any benefits that you already receive, such as housing benefit or Universal Credit.
If your bank statement does not show the payment by the end of April, you should contact HMRC.
What is working tax credit?
Working tax credit is a benefit that you are entitled to if you already receive child tax credit and are working a specific number of hours each week, according to the government.
For those aged 25 to 59, that is at least 30 hours a week. And if you are over 60, disabled or a single parent, you must be working at least 16 hours a week to be eligible.
If you cannot apply for working tax credit, then you can apply for Universal Credit instead.
The basic element of working tax credit payments was increased by £1,045 per year to £3,040 from 6 April 2020 to provide extra support during the coronavirus crisis.
However, this increase ended on 5 April 2021.
That is where the new, one-off payment of £500 comes in - to provide extra support due to the increase in working tax credit coming to an end.
You can find out if you currently receive working tax credit here.