Announcement that £500 bonus for carers will be taxed is a 'kick in the belly', says care boss

Credit: ITV News

A senior carer in Wales says the decision to tax a £500 bonus for carers is a "kick in the belly" for the people who work in the industry.

On May 1st, the First Minister Mark Drakeford MS announced a cash bonus to say thank you to those workerswho had carried out their caring duties throughout the pandemic.

Around 65,000 people in Wales are thought to be eligible for the scheme.

ITV News revealed on Wednesday that those care workers will have to pay tax and National Insurance contributions on the payment.

Credit: ITV News

"Disappointed is an understatement really because they've given with one hand and taken away with another", Helen Vowles from Trusting Hands care centre in Ebbw Vale said.

"They've thanked us, and they've clapped for carers every Thursday night, but we're going to tax you for the little bit we gave you.

"It seems silly because this money - especially in Blaenau Gwent - would go back into the local economy anyway".

The bonus gift from the Labour-led Welsh Government is not exempt from tax because "it is made in connection with employment" and would require a change in the law to make it so.

It now seems likely the Welsh Government will have to "gross-up the payment" themselves costing millions more than the £32m they budgeted for to ensure care workers still receive every pound of the £500 they were promised.

It is likely the bonus payment will impact benefit entitlements as it will be classed as income and will have to be declared to the Department for Work and Pensions.

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Helen runs the day-to-day care business, where a team of carers go into people's homes to address their needs. She says it's been difficult and scary at times during the pandemic.

"I can't tell you how hard these carers have worked", Helen continued, "They start work at 7am in the morning, they don't finish until 9, 10, 12 o'clock at night.

"Many of them are seeing death for the first time because normally when people are coming to the end of their lives, they would go to hospital. I can't imagine what the post traumatic stress will be like the other side of this.

A Treasury spokesperson told ITV News: "Payments made in connection with employment are chargeable to income tax and NICS unless explicitly exempt.

"The Welsh government has the powers and funding to gross up the payment, if its intention is for social care workers to benefit by at least £500," they added.

Credit: PA Images

The Welsh Government were aware the payment was taxable when they made the announcement at the start of May.

At the time the First Minister said: "We are urging the UK Government and the HMRC to make an exception in these truly exceptional circumstances."

But on Wednesday, a Welsh Government spokesperson said: "We are very disappointed that the UK Government wants to tax the one-off thank you payment we are going to make to carers."

"We had hoped they would step up to the plate as we have done by prioritising these payments amongst all the very significant extra demands Covid-19 has made on us. We will continue to pursue this with them."