Covid-19 Test and Trace Support payments exempt from National Insurance contributions for Scotland and Wales

17 December 2020

HMRC has released a policy paper, which explains that the Self-Isolation Support Grant in Scotland and the Self-Isolation Support Payment in Wales will be exempt from both employer and employee Class 1 National Insurance (NI) contributions, and Class 1A NI contributions.

The schemes have been launched in order to assist those employees receiving low incomes, who have been asked to self-isolate by either the Test and Protect Service in Scotland or the NHS Wales, Test, Trace, Protect service in Wales, where they cannot work from home and subsequently, would suffer financial consequences as a result of staying at home.

Those who qualify are entitled to a one-off payment of £500 for the time that they spend in self-isolation.

Payments made under the schemes are classified as earnings and so would ordinarily be subject to employee and employer Class 1 NI contributions, meaning that local authorities would need to consider and possibly deduct the value of employee NI contributions from any payments that are made. The employer would also be required to deduct Class 1 NI contributions on the gross pay figure. This places a cost burden on the local authorities who administer the scheme and also on employers of employees who receive the grants. Therefore, the measure has been implemented to prevent these administrative costs from arising.

The Social Security Contributions (Disregarded Payments) (Coronavirus) (Scotland and Wales) Regulations 2020 introduce a Class 1 and 1A NI contributions exemption for payments made under this scheme. They were laid before Parliament on 15 December 2020 and come into effect from 5 January 2021.

 


The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.