The Government has drafted emergency legislation to help our personal finances during the coronavirus crisis.
Please note that this article was written on 26 March and updated on 2 June 2020.
The spread of coronavirus in the UK and across the world could have a real impact on many people’s finances.
Those at particular risk are people who are self-employed, own small businesses or are on zero-hour contracts. However, as all businesses (regardless of size) struggle, many more individuals will be at risk of loss of income – even those who aren’t in the most at risk groups.
The proposals are evolving all the time, however we’ve summarised the biggest changes so far below. If you need urgent advice, please call Citizens Advice on 0344 411 1444.
Homeowners with mortgages
If you’re struggling to meet mortgage payments because your income has been disrupted, you can contact your lender and ask for a three-month mortgage payment holiday at any time up until 31 October 2020. If you’ve already had a payment holiday and are still struggling with your finances because of coronavirus, you can ask your lender to consider a further three-month payment holiday.
The Government is passing legislation that prevents landlords evicting tenants who can’t pay their rent as a result of a drop in their income for at least a three-month period.
Individuals struggling to repay personal debt
Lenders are to give people struggling to repay credit cards and loans a temporary payment freeze for three months, according to temporary emergency proposals laid out by the Financial Conduct Authority (FCA). The FCA has also stated that the first £500 of any arranged overdraft should be interest-free. If you’re struggling to meet repayments, contact your lender – they’re required by law to offer you help.
The Government has introduced a Self-Employment Income Support Scheme, offering grants to self-employed people affected by coronavirus. It’s currently a temporary scheme, but may be extended by the Government. To qualify, you must have traded in 2019/20 tax year and intend to continue trading, as well as:
- Earn at least half your income through self-employment
- Have profits of less than £50,000 a year
- Have traded in the 2018/19 tax year (and submitted your Self Assessment tax return on or before 23 April 2020)
You can check if you’re eligible to claim using the online tool on the GOV.UK website. Those who own companies and pay themselves through dividends will not be eligible for these grants, but may be eligible for other support.
People who do qualify will be able to claim two taxable grants. The first grant has to be claimed by 13 July and will be worth 80% of your average monthly profits, which will be paid out in a single instalment covering three months up to a limit of £7,500 in total (or £2,500 a month). The second grant will be available in August. It will be worth 70% of your average monthly profits covering a further three months and will be capped at £6,750.
Because the support is only available to those who have filed tax returns, the newly self-employed will not be eligible, but can claim Universal Credit (UC) if their income is affected. The Government has also made it easier to claim Employment and Support Allowance (ESA) and UC, at a rate of £95.85 a week (equivalent to Statutory Sick Pay for the 2020/21 tax year), and the self-employed can defer self-assessment tax payments until January 2021.
Workers who are sick and need to claim Statutory Sick Pay
This can now be claimed from day one of an illness, not day four, as was the case before the coronavirus outbreak. SSP is £95.85 a week in the 2020/21 tax year and you can make a claim at GOV.UK.
Small business owners
The Government announced a £330 billion support package for businesses. Depending on the size of your business and the sector you’re in, there are loans available. Businesses that are eligible for small business rate relief or rural rate relief could also be eligible for a government grant worth up to £10,000.
In addition, the Government has introduced Business Interruption Loans, provided by the British Business Bank. You can check what’s on offer as well as eligibility criteria on the British Business Bank website or GOV.UK.
Small businesses such as sole traders and micro-businesses can apply online for a loan of between £2,000 and £50,000 from 4 May 2020. The Government says the loans should reach businesses in days. There will be no repayments to make in the first 12 months, and loans will be available for terms of up to six years. This is known as the Bounce Back Loan scheme and is separate from the Business Interruption Loan scheme (you can’t apply for both types of loan). For more information on applying visit GOV.UK.
All nurseries are closed indefinitely and most children are still not able to go to school, which is a problem for millions of parents who can no longer work in the usual way and look after children. This presents childcare cost challenges for parents, or the prospect of not being able to work at all while children aren’t able to go to school. Key workers and the parents of vulnerable children can still take their children to school and many schools have re-opened, but only for year R and year 6 children.
While all parents are entitled to parental leave to look after children for a few weeks, this is usually unpaid. The Government may change the parental leave pay entitlement to support parents through the coming weeks. It’s expected that companies will review their pay policies and do what they can to help – though the level of help will vary depending on each company’s situation.
Holidaymakers and travellers
The current advice is to avoid foreign travel anywhere unless it's essential. This means travel insurance for trips abroad should kick in and you’ll be eligible for a claim. If you travel against this advice, any travel insurance you do have will be invalid.
If you’re self-isolating and have to cancel a booking, your existing travel insurance may cover you. It’s unlikely that you’ll be able to purchase a new travel insurance policy for an upcoming trip, but can still claim on existing policies. If you know you need to cancel a trip, contact the accommodation provider as soon as possible, who may be happy to rearrange this for you.
The Association of British Travel Agents (ABTA) has the latest guidance on how to claim refunds for travel.
Pre-payment energy customers
Those who may not be able to add credit to their meters can speak to their supplier about maintaining supply. Options could include credit top-ups or being sent a pre-loaded card.
Mobile operators have removed data charges for those calling NHS 111.
A number of TV and broadband companies have been making some paid-for services free for families stuck indoors.
There may be further benefits you’re entitled to. If you’ve never claimed benefits before, check what might trigger an entitlement at GOV.UK.
Need urgent help?
If you’re struggling with debt, or your mental health is suffering as a result of money worries, don’t struggle alone. Speak to your employer if need be, or to your lenders or landlord.
There are also trained, kind professionals just a phone call away that can help if you're worrying about money or struggling with your mental health. These include: