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HMRC internal manual

Employment Income Manual

Social security benefits: benefit paid during layoffs and short time working

Employees who are temporarily laid-off or placed on short-time working can receive jobseeker’s allowance. Benefit Offices and Jobcentres refer to these employees as temporary stop claimants. The procedure for taxing benefits when paid to this type of claimant is explained in the PAYE Operation area of the PAYE on-line manual.

If the benefit is paid by the Benefit Office or Jobcentre, the amount of taxable benefit will be reported on form P181 soon after any part period to 5 April and at the end of the temporary stoppage period. Where the benefit is paid through the employer, the figure of benefit will be reported on form P181 if:

  • the employer has not deducted tax from the benefit, or
  • tax has been deducted by the employer but the employee has made an objection (see EIM76303).

Where the employer has paid benefit and has deducted income tax from the benefit as if it were normal pay, you will not usually receive a form P181. You can normally accept that the amount of taxable benefit has been fixed correctly. The figure may need revision if you are told the claimant has made an objection. In this event the Benefit Office or Jobcentre will issue form P181.