Your Personal Finances and dealing with the effects of Coronavirus
It is vital that you follow medical advice on keeping you and your family safe from the affects of Coronavirus.
In the meantime, your finances will be of concern. We have put together some helpful information on maximising your income, dealing with priority debts including mortgages and utilities and dealing with debts.
Sick Pay/ SSP
If you are too ill to work or staying at home due to Covid 19 you can claim SSP. You’ll receive SSP of at least £94.25 but some companies will offer more, depending on their individual sick pay policies.
You must earn at least £118 a week to be eligible. This increases to £120 after 6 April 2020. SSP is paid for up to 28 weeks. This will now be paid from the day 1 rather than day 4, in line with new legislation announced in the Budget last week.
Anyone who has problems claiming SSP from their employer can contact the HM Revenue and Customs statutory payment dispute team:
Telephone: 03000 560 630
Monday to Thursday 8.30am to 5pm
Friday 8.30am to 4.30pm
Textphone: 0300 200 3212
Monday to Friday 8am to 5pm
If you need to make a claim for Universal Credit because of Covid-19, check with the Citizens Advice Help to Claim service as soon as possible to find out how any other benefits you receive might be affected and to get further advice about your situation.
If you are a zero hours worker or self-employed and you don’t qualify for SSP then you may be able to claim universal credit or other benefits.
If you’re not eligible or your SSP ends
To support these groups, the Chancellor announced that it would be quicker and easier to receive certain benefits:
- ‘New style’ Employment and Support Allowance will be payable for people directly affected by Covid-19 including those self-isolating according to government advice from the first day of sickness, rather than the eighth day.
- You will be able to claim universal credit and access advance payments without meeting the current requirement to attend a job centre.
- For the duration of the outbreak, the requirements of the minimum income floor in universal credit(UC) will be temporarily relaxed for those directly affected by Covid-19 or those self-isolating according to government advice.
Claiming Universal Credit “UC”
More than 1 million people have claimed Universal Credit in the 4 weeks to the 9 April 2020. This has meant long waits to speak to benefit staff on the phone. It is understood that the DWP has recently confirmed that the telephone call to verify claims will only take place if they need to confirm your application details.
Before you apply it will be necessary to get your financial details together including rent payment, household income and any earnings you are entitled to and you will also need your passport or drivers licence.
If you have savings of over £16,000 either solely or jointly with your partner, this will exclude you from claiming UC although you may be able to claim Job Seekers Allowance of £74.35 per week.
Does UC include rent payment?
You can get help with rent payments. Generally this will only cover around 70 to 80% of your rent payment as the maximum sum payable is set locally and based on the lower 30% of rents payable in each area of the UK. Local authorities can help bridge the gap between the amount paid via UC and your actual rent but Councils tend to concentrate on the most needy cases.
UC and help with Council Tax
UC claimants are entitled to get help with council tax although again this is unlikely to be the full amount. This has to be claimed direct from your local council.
UC and help with your mortgage payments
Surprisingly it is possible to get help with mortgage payments but it is paid after 9 months of claiming UC and this is a loan which attracts interest and needs to be repaid.
Getting help with claiming UC
If you need support with your claim, charity Turn2us provide easy to use benefits calculator and grants search tools. Turn2Us have over 2,000 charities that contribute to the grants that they administer.
Income protection typically pays out when you are too unwell to work, or if you have an accident.
According to the comparison site Comparethemarket it has seen a ‘significant’ increase in quotes given in the past few days for Income Protection policies.
However, experts warn a number of insurers are already beginning to introduce exclusions in new policies that will mean claims for Covid-19 will not be paid. If you already have cover in place you should be able to claim on your policy but there is generally a waiting period which is typically 30 days and it is likely you will need to be signed off by a doctor. Just being in self-isolation is unlikely to trigger payment of this benefit.
Tax relief on home work equipment
You may be able to claim back tax relief for things you must buy for your job that you only use for work, such as tools or equipment. If your employer reimburses you for the items bought you will not be eligible.
If you are eligible, you will need to fill out a P87 form. You must have paid tax in the year. And what you get back is based on what you’ve spent and your tax rate.
In the recent Budget, the Chancellor increased the flat rate tax deduction to cover additional expenses incurred — such as phone calls and energy bills — from £4 to £6 a week from April 6.
To qualify for redundancy you will need to be an employee under a contract of employment, have at least 2 years continuous service and have been dismissed, laid off or on short-time working.
Some firms offer an enhanced redundancy package but the statutory entitlement is:-
- 5 weeks’ pay for each full year of employment after their 41st birthday
- a week’s pay for each full year of employment after their 22nd birthday
- half a week’s pay for each full year of employment up to their 22nd birthday
You’ll receive your normal weekly rate, up to a cap of £525 per week. The maximum amount of statutory redundancy pay you can be entitled to overall is £15,750, while the length of service you’ll be paid for is capped at 20 years.
Redundancy pay is not taxable under £30,000.
How long will my notice be?
The statutory minimum notice period for redundancy is one week for every year you have been employed at the company, up to 12 weeks.
Your contract may give you more than this, but it cannot give you less.
What happens if I am laid off?
If you’ve been asked to take unpaid leave, and your contract allows you to be unpaid during this period, you might be able to claim Guarantee Pay which is limited to a maximum of five days in any period of three months.
There is no upper limit for how long you can be laid-off or put on short-time. You may be able to claim redundancy pay if you are laid-off without pay or put on short-time for either: four consecutive weeks. six weeks within a 13 week period.
Check if your contract says you can do other work while you’re laid off or on short-time working. Even if your contract says you can do other work, you also have to ask your employer – it’s usually okay as long as you’re not working for a competitor.
Layoffs occur when a company undergoes restructuring or downsizing or goes out of business. In some cases, a layoff may be temporary, and the employee is rehired when the economy improves. … Generally, when employees are laid off, they‘re entitled to unemployment benefits.
You might also be able to claim the new-style Employment and Support Allowance and, if you need help with other costs, Universal Credit.
Covid-19 and your money
Covid-19 could have an impact on your money, particularly if you are now having to live off just SSP or have had your hours significantly reduced.
Some banks and building societies are offering extra support if you’re affected by covid-19 including temporary increases in credit card borrowing limits, increased cash withdrawal limits and refunds on credit card cash advance fees. You should check with your bank or building society to see what help is available.
Mortgage Payment Holidays
The government has agreed with mortgage lenders that they will offer repayment holidays of 3 months to households in financial difficulty due to Covid-19.
Missing or being late with a payment on money you’ve borrowed can have serious implications for your credit rating, it’s vital you check with your lender before you stop any payments as some lenders have agreed that credit ratings will not be affected.
How do ‘payment holidays’ work?
The mortgage repayment is deferred for a period. The monthly payment changes to zero, and interest accrues for the period.
Where repayments are deferred for a time, the borrower will need to make up these repayments in the future, which could be over the remaining term.
It is not long term solution, but can be particularly appropriate where there is a temporary shortfall of income.
Water companies have been urged by OFWAT to exhaust the wide range of options they have at their disposal to help consumers whose finances and daily lives will be impacted by the virus.
This could include payment breaks for those whose incomes have been temporarily impacted and flexibility over payment timings and methods for people who normally pay their bill in person but are having to self-isolate.
OFWAT urge anyone who is worried about paying their bill or accessing services to immediately get in contact with their supplier and ask for help, rather than suffering in silence.
Most of the large energy suppliers have advised that they will consider a range of steps to help individuals struggling, which would include pushing back bill dates for people affected by Covid-19 plus removal of charges for late payments. It also may be possible to agree to pay your bill over a longer period of time. It may be possible to also get emergency credit for those on traditional pre-payment meters.
The Chancellor announced in the Budget on the 11th March a range of measures related to Covid-19. Included in these measures was additional funding of £500 million (nationwide) for Council Tax relief through existing Local Council Tax Support schemes.
Councils will also be able to use the funding to provide further discretionary support to vulnerable people through other support arrangements such as Local Welfare Schemes.
Local Government Secretary Rt Hon Robert Jenrick MP said:
Providing the necessary financial support to people and families is critical at this difficult time when many people will be concerned about changes to their income.
That’s why we’re giving local councils an additional £500 million, to ensure help is available for the most vulnerable people in our society who are struggling to pay their council tax bills.
The government is on your side and will do whatever takes to help.
The Hardship Fund will support those in receipt of Local Council Tax Support schemes by reducing their council tax liability for 2020 to 2021.
People in receipt of Local Council Tax Support schemes are recognised as the most vulnerable to changes in income and the government is committed to ensuring they have the support they need.
The guidance published on 24 March 2020 provides clarity to councils on how they can quickly provide support to those households which require support.
It’s not ideal taking on credit when your income is down but it may be necessary and it is still possible to get 0% credit cards although it is understood that lenders are tightening up on their acceptance criteria.
Access your fixed-rate savings
Normally if you’ve locked cash away in a fixed-rate savings account, you have to pay a penalty to get it out before the fixed term is up. Yet nine banks have told us they’ll waive penalties for those affected by the pandemic.
It is worth noting though, with interest rates dropping, your money may well be locked away at a rate that’s now impossible to get, so you should only do this if really needed.
Help for renters – speak to your landlord
The government has announced a radical package of measures to protect renters and landlords affected by coronavirus. As a result, no renter in either social or private accommodation will be forced out of their home during this difficult time.
Emergency legislation has been enacted to prevent landlords from starting proceedings to evict tenants for at least a three-month period. As a result of these measures, no renters in private or social accommodation needs to be concerned about the threat of eviction.
Recognising the additional pressures the virus may put on landlords, the government has confirmed that the three month mortgage payment holiday announced on 17 March 2020 will be extended to landlords whose tenants are experiencing financial difficulties due to coronavirus. This will alleviate the pressure on landlords, who will be concerned about meeting mortgage payments themselves, and will mean no unnecessary pressure is put on their tenants as a result.
At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.
To support this announcement the government has worked with the Master of the Rolls to widen the ‘pre-action protocol’ on possession proceedings, to include private renters and to strengthen its remit. This will support the necessary engagement between landlords and tenants to resolve disputes and landlords will have to reach out to tenants to understand the financial position they are in.
The government will also issue guidance which asks landlords to show compassion and to allow tenants who are affected by this to remain in their homes wherever possible. The National Housing Federation and Local Government Association have welcomed the new support for social renters and made clear that no one should be evicted because of the coronavirus.
If you rent your home and are struggling to keep up with payments due to covid-19 related difficulties, speak to your landlord as soon as possible. If you can afford some payment towards your rent, this will reduce the level of arrears that will accrue.
Dealing with your debts
The Financial Conduct Authority (FCA) called on lenders to use flexibility built into their rules to support consumers, taking into account customers’ individual circumstances. Most lenders have responded and published details of how they are helping their customers.
For example Nationwide have advised they will:-
Grace period of 3 months on credit card payments, payments reduced to £1 and no late payment fees
Fee free overdraft interest holiday – need to complete a form
3 month grace period on loans
3 month mortgage break and will not registered as arrears on persons credit file – applications online
If you can demonstrate that you are struggling most lenders will offer breathing space of 6 weeks. Creditors will generally require you to complete your income and expenditure to demonstrate your financial position but the challenges of engaging with creditors is becoming more problematic where call queues can mean very long wait times.
Debt advice agencies have a role to play in this emerging digital engagement world. They have data protection agreements with creditors and can assist in getting notification to non-telephony resources in creditor organisations in a consistent time frame. The agency will have to undertake an ID check and can help customers having to communicate separately with all their creditors. Most of these agencies have secure methods of engaging with consumers digitally and have pragmatic approaches to engage with customers who need help and support.
It’s vital that you seek advice from debt advice agencies that are regulated by the FCA. The organisations must be authorised to provide debt counselling. If they have debt adjusting they can help you negotiate your payments with your creditors. Additionally, if they have permission to hold client funds, they can set up debt management plans more detail of which is below.
There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on 0800 138 7777 or by visiting their website.
The Debt Advisor has been in existence for 20 years and we have gained a reputation as the “go to” practice for debt advice and debt solutions and most importantly, we are authorised and regulated by The Financial Conduct Authority “FCA”.
Options to dealing with debt
An Individual Voluntary Arrangement (IVA) would allow you to repay your debts over a 5 or 6 year period dependant on your individual circumstances. You would make one monthly payment based on what you can afford. Once you have successfully completed the IVA, your creditors would write off any remaining debts.
A Debt Management Plan (DMP) is a plan that is set up with your creditors by a debt advice agency that has authority from the FCA to manage these type of plans. You make one affordable monthly payment to agency who then distribute your payment to your creditors (within 5 working days) and negotiate with creditors to freeze interest and charges. DMP’s do not provide for you to be able to write off any element of your debt.
There are a range of other options that could be appropriate, if you contact us, one of our experienced advisors will explain all the options available and you can make an informed decision on which route to take.
If you live in Scotland, the solutions are different. You can find out more on by visiting Scottish Debt Solutions.
Get Debt Advice Today
For full debt advice and whether any of our available debt solutions would be the best option for you to get out of debt, you can speak to one of our advisors directly on 0800 085 1825 or arrange a callback
Debt Solution Options
Do you need help?
Specialist advisors are available who can advise you on the most appropiate solution to bring you relief from debt