Our focus is helping our customers, the wider community and our people through the Coronavirus outbreak and beyond.
While your health and welfare are top priorities, you may also be really concerned about how this challenging time might affect your finances and your ability to manage them. That’s why we want to offer some guidance and keep you updated and informed on the ongoing changes.
What should I know?
Since last March, millions of people have taken a temporary payment holiday on their mortgage, credit card or loan payments. The Financial Conduct Authority (FCA) advised lenders to offer payment holidays to people who were struggling to meet monthly payments due to coronavirus.
The deadline to apply for a payment holiday has now passed – you'll only be able to access a payment holiday if you applied before 31 March 2021.
(If you’re currently on a payment holiday, you can extend it up to 31 July 2021, as long as that doesn’t take you over the six month payment holiday limit).
But if you’ve missed the payment holiday deadline, there's still help available in the form of ‘tailored support’.
Tailored support for borrowers
Now the payment holiday deadline has passed, lenders will typically offer ‘tailored support’. The support you are given will depend on your circumstances.
For mortgage holders, tailored support could include a pause or reduction in payments, or changing the terms of your mortgage. For those struggling with loan or credit card payments, tailored support could involve pausing or reducing payments, or agreeing an affordable repayment plan.
If you’re struggling with payments for any type of credit, check what help your lender offers.
Be aware that if your tailored support results in you pausing or reducing your regular payments, this is likely to appear on your credit report in two ways.
Firstly, an arrangement ‘flag’ will appear on your report for three years after the arrangement ends.
Secondly, you’ll probably see ‘arrears’ on your credit report if you’re not making the minimum payment set in the original agreement. (‘Arrears’ means the amount of money you owe and should have paid earlier).
These changes to your report may affect your credit score and chances of getting accepted for credit.
Lenders should explain how any support they offer may impact your credit report. You should try to meet your regular payments if you can and only ask for support if you really need it. Interest will still be charged for the duration of your mortgage payment holiday so this could mean an increase in your future monthly mortgage payments, or an extension to your mortgage term.
As well as the payment status of your accounts, lenders can also take account of many other credit score factors, such as your total level of unsecured debt (for example, the balance of any credit cards, personal loans and overdrafts) and how heavily you’re using your credit cards (your credit utilisation).
Updated guidance on being furloughed
The Coronavirus Job Retention Scheme allows firms to temporarily freeze employment for those who can’t work due to the outbreak. For the duration of the employment freeze, the government will pay 80% of furloughed staff’s salary - up to £2,500 per month. Following the announcement of new emergency measures due to the pandemic, the government has extended this furloughing scheme again to last until the end of September 2021.
You need to have been on your company’s payroll on 30 October or before to be eligible. If you have been made redundant, you can be rehired and furloughed. This applies if you were employed on 23 September and have since been made redundant or left your position voluntarily.
See the latest government advice and guidelines on being furloughed.
If your employer is offering you unpaid leave or redundancy because they can’t afford to put you on furlough, you can ask them to consider offering you delayed pay. It’s a matter between you and your employer, and is best confirmed via a formal agreement.
Support for the self-employed
There is also support available if you are self-employed via a scheme called the Self-employed Income Support Scheme (SEISS).
There is a fifth (and final) SEISS grant, covering lost earnings during May to September. (Claims for the previous four SEISS grants have now closed)
The value of the fifth grant will depend on your turnover:
- For those who have suffered a 30%-plus fall in turnover, the grant will cover 80% of three months’ average trading profits (up to a maximum of £7,500)
- For those who have suffered less than a 30% fall in turnover, the grant will cover 30% of three months’ average trading profits (up to a maximum of £2,850)
You can find out how to work out your turnover figures for the fifth SEISS grant on the Gov.uk website.
If you’re newly self-employed (you only started trading in the 2019/20 tax year), then you will get 80% of average profits. You won’t need to provide the turnover information.
To be eligible for the fifth grant, you must have:
- Filed a 2019/20 tax return
- Traded in both the 2019/20 and 2020/21 tax years – and intend to continue to trade
- Seen your profits continue to be hit by coronavirus from 1 May to 30 September - and have evidence of this
- Earned at least 50% of your total income from self-employment
- Recorded average trading profits of £50,000 a year or less
Your grant will be based on your 2019/20 tax return. But if you’re not eligible based on your 2019/20 tax return (for example you earned more than £50,000) HMRC will look at your 2016/17, 2017/18, 2018/19 and 2018/20 returns. If you earned less than £50,000 on average over those four years, you will be eligible.
You can keep working if you claim the grant, but you must be able to prove your profits have been affected by the pandemic.
HMRC say they’ll contact people from mid-July onwards with their unique claim date - this is the earliest day you’ll be able to apply for your grant. But you can make a claim up until 30 September.
If you think you should be able to claim, and you don’t hear anything by end of July, you can call the HMRC helpline on 0800 024 1222 or find more information on the Gov.uk website.
Tax relief working from home
If your employer requires you to work from home during the outbreak, and that means you've had increased household bills (eg energy), you're entitled to claim something back.
You can claim tax relief on £6 a week of income. If you’re a basic rate 20% taxpayer, you’ll save about £1.20 a week, or around £62 a year. If you’re a higher bracket taxpayer, you’ll save about £2.40 a week, or around £125 a year.
Even if you’ve just worked at home for a few days, you’re eligible for a whole year’s tax relief for 2021/22. What’s more, if you were eligible to claim for the last tax year (2020/21), you can still claim for that too. This could mean you get around £120 in total as a basic rate taxpayer, or up to £250 if you’re in a higher bracket.
This can be claimed if you’re a full or part-time worker here through the Government’s tax relief website. It’s possible to claim more if you believe your costs are higher than £6 a week, but you’ll need to provide evidence of the cost increases.
If you sort your tax via self assessment each year, you can’t use the tax relief website. But you can claim the allowance as part of your self assessment form.
Possible £500 grant if you (or your child) have to self-isolate
You may be able to get a grant of £500 if you are on a low income, and you (or your child) have been told to self-isolate due to coronavirus.
To be eligible, you must meet the following conditions:
- You or your child have been told to isolate by the NHS Test and Trace scheme, or your child’s school or childcare provider
- You’re employed or self-employed
- You’re unable to work from home, and will lose income by self-isolating or staying at home to care for your child
- You (or the partner you live with) must receive one of the following benefits: universal credit, working tax credit, income-based employment and support allowance, income-based jobseeker’s allowance, income support, housing benefit or pension credit
If you’re taking time off work to look after your child, they must be aged 15 or under (or 25 or under if they have an Education, Health and Care Plan). They must also live with you and normally be at school or in childcare.
You can apply for the grant through your local council. Some councils may offer the grant if you’re not on benefits but would suffer financial hardship by self-isolating, though different councils have different rules on this. You can find contact details of your council here.
If you’ve recently been furloughed or made redundant, or you’re self-employed and facing a reduction in income, you could now be eligible for Universal Credit to help you meet your basic living costs. You can find more information on that here.
It’s simple to make an online application for Universal Credit, and means you can avoid the extremely busy phone lines. You may receive a call after you’ve completed your online application to verify your details.
If you have a child under the age of 16 and your income has recently dropped due to redundancy or being put on furlough, you might now be entitled to claim child benefit.
Parents or primary carers are eligible to receive £21.05 (£21.15 from April) a week if you have one child, or £35 a week (£35.15 from April) if you have two children. The benefit is paid every four weeks and you can backdate claims for up to three months. If you or your partner earns over £50,000, you may have to pay back some of the benefit in tax. You can learn more here.
If you’re struggling to pay your rent due to the outbreak, speak to your landlord as soon as possible to let them know your situation and try to work out a repayment plan.
You could also be entitled to financial help with your rent. You can check the assistance being offered by the government for renters during the outbreak here.
If you have a child at university or about to start at university this year, and your household income has dropped, let student finance know. The government’s maintenance loan to cover living costs for undergraduates is means-tested depending on household income. If your income is at least 15% lower over this year, you can complete a current year income assessment.
What can I do?
Your existing credit commitments
We know that this is a very difficult time and that many people have been severely affected by the financial impact of Coronavirus, but if you’re able to, it’s really important to pay all of your bills on time so you don’t damage your chances of getting credit in the future. If you can’t do this, try to pay at least the minimum amount due on your credit commitments.
If you think you’re going to struggle to make payments, due to the knock-on effects of the outbreak, please speak to your lender as soon as you can. You can find more details about the help that lenders are offering in our guide here.
If you’re worried you won’t be able to pay your energy, water, mobile or other monthly bills, contact your providers to see if they offer flexible payment options, such as payment breaks or reductions in bill amounts during the outbreak.
If you’re a prepayment customer and are currently self-isolating, you could benefit from the emergency measure being introduced by providers. You can find more information on that here.
If you’re not driving as much as you usually do and your car is parked at home, the cost of insuring it should be lower. Speak to your insurer to let them know of your lower mileage or consider switching to a provider that only charges you for the distance you drive.
It’s also a good idea to compare energy prices and make sure you’re taking advantage of the best offers available.
If you’re concerned about not being able to pay your council tax bill, contact your local council as you may be eligible for a reduced council tax bill. The Government distributes a hardship fund to councils so that they can support local residents who are struggling with their finances.
Balance Transfer Cards
If you have existing credit card debt, then you could save money by transferring balances to a credit card with lower interest. A small transfer fee may apply but this may reduce your monthly repayments and can help reduce the cost of existing borrowing.
We’ve seen some lenders remove their best credit offers, so it’s a good idea to check your eligibility when applying for credit. This will help you avoid being refused credit and building up multiple credit application (hard) searches. Doing an eligibility check won’t change your credit score or appear on your credit report to lenders. Click here to check your eligibility for credit cards.
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The Bank of England base rate was cut to 0.1% on 19 March. This means that if you’re on a variable or tracker mortgage, you could see your repayment rates fall.
If you have a fixed-rate mortgage, this cut will not affect your monthly payments. However, if you’re coming to the end of your existing fixed-rate agreement, this could be a good time to search for a new offer, as mortgage rates remain at historical lows.
Protect your identity
Unfortunately, we’ve seen a rise in scammers taking advantage of the outbreak to exploit people. We want to encourage you to continue being vigilant with your personal details – particularly online. Visit our guide for more information on how you can protect yourself.
If you've received a suspicious email that looks like a scam, you can now report it to the government's official cyber security department by forwarding the email to: firstname.lastname@example.org. Find more guidance around scams that have appeared during the pandemic in our fraud guide.
The pace of news and information about the virus and its progress can seem overwhelming. As can all the information about the actions being taken by companies, governments and individuals to help us make it through. So, we’ll continue to try to help by summarising and simplifying what you need to know about money and credit, as we as a country work together to get through this.
Head over to our coronavirus guidance page for more help and support.
Information correct as of 5pm 8th July 2021.