You've been laid off from work - how it affects tax credits

If you've been getting Working Tax Credit and have been 'laid off', your payments may not stop straight away. You will usually need to let the Tax Credit Office know if you've been laid off - otherwise you may get more tax credits than you're entitled to.

What does 'laid off' mean?

Being laid off means that your employer does not provide you with work. This may be temporary or permanent and sometimes your employer can't immediately tell how long you might be without work.

If your hours have dropped but you're still working, then you have not been laid off. However if your hours drop to below 16, you can normally only get Working Tax Credit for a further four weeks from the date your hours dropped to below 16.

How changes to your usual working hours affect tax credits

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If your employer lays you off and tells you it is temporary

You're treated as though you are still working for up to four weeks from the date your employer lays you off. If you don't go back to work after that - because you've been laid off until further notice or you lose your job - you're treated as if you have stopped work. If this happens, you have a month from the date you were told the news to tell the Tax Credit Office.

Example 1

John Smith is laid off for four weeks on 8 January 2009. His employer tells him that he can expect to go back to work on 5 February 2009. John calls the Tax Credit Helpline to tell them about this. He also tells them when he expects to go back to work.

On 5 February 2009, 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 will get Working Tax Credit up to 4 March 2009.

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You're laid off until further notice or you lose your job

If during the first 4 weeks you are laid off, your employer tells you that you've been laid off until further notice or you have lost your job, you're treated as if you have stopped work from the day they tell you. You will be paid tax credits for four more weeks from that date.

You will need to let the Tax Credit Office know that you have been laid off until further notice or you have lost your job. You need to do this within one month of your employer telling you.

Example 2

Anne Jones is laid off on 8 January 2009. Her employer tells her that she can expect to go back to work on 1 February 2009. Anne calls the Tax Credit Helpline and tells them the lay off is temporary.

On 26 January, her employer tells her that they do not know if she will be able to go back to work at all. Anne calls the Tax Credit Helpline to tell them the lay off is now indefinite. Anne is treated as though she has stopped work. She will get Working Tax Credit up to 23 February 2009 (four weeks from 26 January 2009).

Example 3

On 8 January 2009, Anita Roberts is told that her employer has to lay her off indefinitely. Her employer does not know if she will be able to go back to work at all. Anita calls the Tax Credit Helpline to tell them she has been laid off indefinitely. Anita will get Working Tax Credit up to 5 February 2009.

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Contact the Tax Credit Office

You can report being laid off or if you've lost your job by calling the Tax Credits Helpline which is open from 8.00 am to 8.00 pm every day except Christmas Day, Boxing Day and New Year's Day. The numbers you can ring are:

tel 0845 300 3900
textphone 0845 300 3909 - if you are deaf or have a hearing or speech impairment

If you're calling from outside the UK you can also contact the Tax Credit Office on Tel + 44 289 053 8192.

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