No-tax plea over Covid payments

THE Scottish Government is lobbying the Treasury to make the new self-isolation payment exempt from tax.

In a letter to Chancellor Rishi Sunak, Social Security Secretary Shirley-Anne Somerville said taxing the £500 payment could mean fewer people apply.

It is designed to support those on low incomes who have been asked to self-isolate after testing positive for coronavirus, or after coming into contact with someone who has.

The money will initially be targeted at those on Universal Credit or other legacy benefits. Payments will be made through the Scottish Welfare Fund, which is administered by local authorities.

Somerville wrote: “In a worstcase scenario, the prospect of a future tax liability may prevent a person from applying, leading to them having to make the difficult choice between self-isolating and returning to work so they can support themselves financially.”

The Treasury said: “We have treated the Scottish Government scheme the same as we have similar schemes in the rest of the UK by making it subject to income tax but also exempting it from National Insurance Contributions.

“We have also ensured it has no detrimental impact when calculating Universal Credit and tax credits so no one receiving these payments will see their welfare payments reduced.”