Welsh carers and social care workers will have to pay taxes on the £500 they have been promised by Welsh Government. The payment was announced beginning of May. At the time First Minister Mark Drakeford urged the UK Government and HMRC to make an “exception in these truly exceptional circumstances’. However, this plea has fallen on deaf ears and it has been announced that care workers have to pay taxes and declare the £500 one-off payment as income.

The scheme applies to 64,000 workers in Wales and was meant as a gesture of thanks and appreciation of the commitment of care workers who have continued to look after vulnerable people at great risk to themselves. The scheme applies to everyone carrying out personal care whether or not you work full time, part time or on a zero hour contract.

Regarding the payment as taxable income has a number of implications for both Welsh Government and hence Welsh funding and Welsh care workers. Welsh Government is now faced with the question of whether to top up the payment to ensure workers receive the full amount, meaning that considerable amounts of Welsh funding is lost. Otherwise, Welsh care workers will potentially lose a significant fraction of their bonus!

In addition, having to declare the money as taxable income might have implications for people’s in-work benefits such as tax credits or Universal Credit. Many care workers carry out very skilled and demanding work for minimal wages. They often work part time or are on precarious zero hour contracts. An additional £500 would have meant something, however, having to pay taxes and declare it as taxable income means that the money is just going to flow back to the treasury in London.

What started off as a welcome gesture of appreciation of care work, which is notoriously undervalued and underpaid, has now turned into something that enriches the treasury rather than benefits Wales and Welsh workers.