Coronavirus and your finances

Stephen

Money Saving Tips
COVID-19

Last updated: Friday 11th September 2020

After the outbreak of coronavirus, the UK government has announced some temporary financial regulations. Here we look at what to do if they apply to you.

Statutory Sick Pay

If you’re off work because you’re sick, your employer will pay £94.25 a week. This is called Statutory Sick Pay (SSP), and it can be paid out for up to 28 weeks. Until recently, you could claim SSP if you’d been off work for four or more days.

Is SSP changing?

The government has changed regulations around SSP so that it starts from the first day you’re off work.

The most recent change has come as you can now claim SSP if you’ve been asked to stay at home because either you or someone you live with has shown symptoms of coronavirus. For more details on whether you’re entitled to SSP if you’re in self-quarantine, we’d recommend speaking to your employer.

Will I need a sick note to claim SSP?

Anyone off work for more than seven days usually needs a sick note from their doctor to say they’ve been unwell. As people are being told to stay away from GP surgeries if they’ve been showing symptoms, sick notes can be obtained from NHS 111 online.

What if I’m self-employed?

Self-employed people can’t get SSP, but they can make claims through the Employment and Support Allowance. As with SSP, claims can be made from the first day that you’re off work sick.

Salary support

The government has announced that if your company can’t afford to pay your wages, they can claim 80% of it through a grant so that you can still get paid until things go back to normal. This way, companies that have had their business affected by coronavirus, like pubs or gyms, don’t have to let their staff go.

This scheme is called the Coronavirus Job Retention Scheme and it will run until at least the end of July 2020 backdated from March 1st as per the government’s update on Monday 12th May.

Changes to the furlough scheme

As of July, workers were able to go back to work part-time, with employers able to place them on furlough for the rest of the time. Employers can bring you back for any shift pattern, and these patterns can change from week-to-week. Normal wages have to be paid for any time worked, and the normal 80% furlough pay will apply for any hours not worked.

From August, employers are required to pay National Insurance and pension contributions (previously covered by the government as a part of the furlough scheme). Salaries will still be covered by the government.

In September, the announcement that employers will have to pay 10% of any furloughed employee’s salary (with the government making up 70% of their normal wage) will come into effect. There is a cap of £2,190 on any such salary payments. By October, the employer contribution will rise to 20%. This will be capped at whichever comes first from a maximum £2,500 or 80% of a normal salary payment.

What are furloughed workers?

To become eligible, you’ll become a “furloughed worker”, which means you’ll stay employed and paid by your company even though you’re not doing any work. An important point is that you can’t do any other jobs while classified as a furloughed worker.

Can I claim benefits if my salary is reduced?

Some people whose salaries are cut may become eligible for additional financial support (including Universal Credit). To figure out if you can get any help, go to entitledto’s Benefits Calculator and enter your information (including your new salary).

Can self-employed people claim salary support?

As of Tuesday 13th May, self-employed people will be able to apply for grants through the Self Employed Income Support Scheme. The grants will be worth 80% of the average monthly revenue over the past three years and they will be capped at £2,500 per month. The first part of the scheme covered the months of March, April and May, meaning the upper limit for any grant will be £7,500.

New applications for the Self Employed Income Support scheme can now be made, although these will cover 70% of monthly revenue rather than 80%, meaning they will be capped at a total of £6,570. People have until the end of October to make these claims.

The grants can be backdated to the start of March as long as income tax was filed in January. For those who missed the January submission, the government has announced a four-week deadline for all remaining tax to be submitted. This means any income tax will need to be completed before Thursday 23rd April.

Once a claim for a grant has been submitted, you should be told straight away if you’re eligible to receive one. If your claim is successful, the entire grant should be paid into your bank account within six days.

Self-employed people are still able to work while claiming these grants. The only other criteria are:

  • Half of income needs to have come from self-employment and declared on their tax return
  • Earnings must be under £50,000 a year

Furthermore, company owners will not be able to cover dividends that they pay to themselves using the grant. Additionally, people who became self-employed this year are ineligible and will need to apply for Universal Credit instead of this grant.

Changes to benefits payments

The standard levels of Working Tax Credits and Universal Credit will increase by £20 a week from Monday 6th April. Added to this, Local Housing Allowances are changing from April. The change will mean more people will be eligible for rental support through Universal Credit. To see if you can get help, use entitledto’s Benefits Calculator.

Mortgage and loan repayment holidays

Some banks have announced that people struggling to pay back loans or mortgages can take payment holidays until they can continue with their repayments. These holidays will only be available for those whose income has been affected by the coronavirus outbreak. You won’t incur any charges for taking a payment holiday, and your credit score won’t change as a result of it either.

The ban on evictions in England and Wales is set to end on Monday 21st September. The only exception will be for people living in areas where additional local restrictions are in place. Those at risk of eviction should be aware that an eviction notice had to have been served on 27th March for the eviction to take place on this date. New eviction notices must now be handed out with three months notice in England and six months notice in Wales.

It has also been announced that no evictions will take place over the Christmas period with the exception of circumstances involving domestic abuse or antisocial behaviour. No exact dates have been announced for this period as of yet.

Payment freezes on some loan and credit card repayments

As of Thursday 9th April, payment freezes were brought into place on loan and credit card repayments for people struggling with debt. Since this announcement, freezes have also been introduced for other forms of credit such as store credit. Your credit record will not be affected by deciding to freeze payments, but you will need to pay off any additional interest from this period.

The freeze is set to last three months and the FCA has said that customers who need financial help do not have to apply right away to use the repayment freezes. Although banks have been told they cannot freeze cards during this time, banks can refuse to give a customer a payment freeze if they feel “...that it is obviously not in the customer’s interests to do so.”

The types of repayments that can be frozen are:

  • Personal loan
  • Guarantor loan
  • Logbook loan
  • Credit card
  • Store card
  • Home collected credit (doorstep lending)
  • Car finance

On Friday 19th June, it was announced that payment freezes are being extended for a further three months for anyone who has already taken up this option. For those who haven't yet applied, the deadline for new payments freezes is 31st October.

People are now also able to freeze parts of a loan while continuing to repay the rest, but for more details on this, we'd recommend getting in touch with the provider to see how it might work. For car finance loans, the deadline is slightly sooner (27th July), and it's important to note that your car cannot be repossessed if you're struggling with repayments due to the impact of coronavirus.

No announcements have been made about payday loans, but it is expected that support for people with these types of finance will be available soon.

For more information, take a look at the FCA's official announcement.

IVA and trust deed repayments

Supervisors are now able to ask your creditors for payment freezes or reduced payments if you've been financially affected by coronavirus. Your supervisor is now able to make changes to your IVA without immediate approval from the creditors, meaning that this process is much faster than it has been in the past. This process is called "variation", and the other changes to this process also mean that:

  • You can freeze payments for an extra three months
  • Your supervisor can reduce monthly payments by 25%
  • Key workers are exempt from IVA rules regarding overtime and bonuses
  • Supervisors have the power to extend IVAs by 12 months if rather than release equity to repay a creditor

The deadline to apply for payment breaks is 20th October.

For people in Scotland, trust deeds are the nearest equivalent to IVAs. The guidance from Account in Bankruptcy has been for trustees discharge people from their debts at the end of the four-year trust deed period even if payments have not been made.

Monthly bills

Council tax

At the moment, no changes have been made to council tax payments ahead of the new year of payments beginning in April. If you miss a monthly council tax payment, you might be asked to then pay the entire fee in one go. So if you have concerns about being able to afford the bill next month, speak with your council as soon as possible and they’ll be able to advise on what to do.

Utilities

The best thing to do if you’re worried about payments is to speak with the provider. While they might not be able to freeze your payments, they can set up payment plans and look at switching you to a cheaper tariff. The same goes for any finance agreements you have (e.g. Personal Contract Purchase on a car).

There is credit available for people on prepaid meters, and you can get this by speaking to your provider. For more information on credit for prepaid meters, take a look at the recommendations from Citizens Advice.

Advice on your finances

For the best advice on how to manage your finances during this difficult time, we’d recommend heading to the Money Advice Service’s dedicated coronavirus page.

Useful links

Benefits Calculator

Government Guidelines relating to financial implications of COVID-19

Money Advice Service guidance on COVID-19

Shelter advice on COVID-19 issues

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