COVID-19: Support through the benefits system

20 March: ICAEW members may need to help clients, friends or family to access support through the benefits system during the coronavirus outbreak. Benefits may be something on which they would not usually advise. The Tax Faculty has created this basic guide on which benefits to consider, together with sources of support.

This guidance covers the benefits provided by the Department of Work and Pensions to individuals of working age who are unable to work, who lose their job or whose income from self-employment reduces or stops. Support provided by employers, such as statutory sick pay, is covered in a separate article.

Contributions based benefits

Contributions based benefits are those where eligibility is based on the individual’s national insurance contributions record.

New style Jobseeker’s Allowance (JSA)

JSA is available to those who are seeking work. Only Class 1 national insurance contributions count for JSA so it is available to those who have been recently employed, but not to most people who have recently been self-employed. The period used to check entitlement is usually the last two complete tax years before the benefit year in which the claim starts.

New style Employment and Support Allowance (ESA)

ESA is available to those who are unable to work due to illness or disability. Class 1 and 2 national insurance contributions count for ESA so it is available to the recently employed and self-employed. The period used to check entitlement is usually the last two complete tax years before the benefit year in which the claim starts. Class 2 national insurance contributions must be paid by the 31 January following the end of the relevant tax year for that year to qualify for ESA purposes.

At Spring Budget 2020 the government announced that new style ESA will be payable from day one of sickness, rather than day eight, if you have COVID-19 or are advised to self-isolate.

Means tested benefits

Means tested benefits are those where eligibility is based on the individual’s financial circumstances rather than their national insurance contributions record.

Universal credit (UC)

Universal credit is replacing the following benefits:

  • income-based Jobseeker’s Allowance (JSA)
  • income-related Employment and Support Allowance (ESA)
  • Working Tax Credit
  • Child Tax Credit
  • Housing Benefit
  • Income Support

These legacy benefits are still being claimed by some people but new claims are not usually possible. Individuals must instead make a claim for universal credit.

At Spring Budget 2020 the government announced the following COVID-19 related changes to universal credit:. 

  • If you are self-employed and receiving universal credit and you have COVID-19 or are advised to self-isolate the requirements of the minimum income floor will be temporarily relaxed. This change took effect on 13 March 2020 and will last for the duration of the outbreak, to ensure that self-employed UC claimants will receive support. 
  • If you need to claim universal credit, but have COVID-19 or are self-isolating, you will now be able to make a claim and to access advance payments without needing to attend a Jobcentre Plus.

The controversial five week wait, which is a feature of new claims for universal credit, remains.  

Other assistance 

At Spring Budget 2020 the government announced further support including : 

  • Hardship Fund - support from local authorities in England, usually for council tax relief.
  • Three month mortgage or rental holidays.
  • The Financial Conduct Authority has called on lenders to use flexibility built into their rules to support consumers experiencing difficulties paying back personal loans or credit card bills as a result of COVID-19.

These measures are still in development and the government may provide further assistance as the situation develops. 

HM Treasury has published a summary of the measures to help individuals and businesses. 

More support 

Entitledto.co.uk has a useful benefits calculator. 

Low Incomes Tax Reform Group has a checklist of most benefits with links to more detail. 

Citizens Advice can provide face- to- face and telephone support with benefit claims. 

Turn2Us helps people in financial need gain access to welfare benefits, charitable grants and other financial help. 

RevenueBenefits is a website for benefits advisers which has technical detail. 

AdviceLocal which has a search facility for local independent advice organisations. 

CABA the charity that supports Chartered Accountants’ wellbeing. 

Further support from ICAEW on the coronavirus outbreak

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