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?
A payment holiday is a break from your usual monthly payments. The Financial Conduct Authority (FCA) has advised lenders to offer payment holidays to people who’re struggling to meet monthly payments due to coronavirus.
Payment holidays are available on mortgages, credit cards, car finance, personal loans and pawned goods.
Payment holidays have been extended so you will still be able to ask for one until 31 March 2021.
For example, if you’ve already had or are on a 3-month payment holiday, you will be able to apply for another 3-month payment holiday. You can find more details here.
If you have taken out short-term credit such as payday loans, you can defer payments for one month if you’ve not already had a payment holiday.
Agreed payment holidays up to a maximum of six months won’t be registered on your credit report, protecting your credit score. (It’s important to agree it with the lender first – don’t cancel any direct debits or payments until you have).
Remember that you’ll still be charged interest during a payment holiday. The interest will be added to your total balance, so your minimum payment might go up once the payment holiday ends. For this reason, it’s important you speak to your lenders about your situation, and how you can make monthly payments once they restart.
If you’ve already deferred payments for six months and can’t resume your usual payments, lenders will typically offer ‘tailored support’ that best suits your circumstances. If this 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 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 April 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.
With schools being closed across the country, if you can’t work due to childcare commitments you can also be furloughed by your employer. This can be done on a full or part-time basis. (For example, you could choose to be furloughed for a certain number of hours or days per week if you are splitting childcare responsibilities).
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.
There is also support available if you are self-employed via a scheme called the Self-employed Income Support Scheme (SEISS). The Government will be offering a new grant, covering the period from 1 November 2020 until 31 January 2021. Instead of 55% of trading profits over three months, you can be eligible for a grant covering 80% of three months’ average trading profits, paid out in a single instalment. The new maximum grant amount will now be £7,500. The deadline for applying is 29 January 2021. You can read more here.
A new Government Job Support Scheme was announced on 22 October. This has been postponed following the extension of the furloughing scheme.
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 of income, which for basic 20% taxpayers is £1.20 a week (about £60 per year), and £2.40 per week for 40% taxpayers (about £120 per year). 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.
Remember that the self assessment tax return deadline remains 31 January despite the pandemic. You’ll get hit with a £100 fine if you miss the deadline (plus further charges of £10 a day if your return is more than three months late). If you think you’ll struggle to pay your tax bill, contact HMRC as soon as possible. They may be able to help you spread your payments.
Home schooling help
Having to turn your living room into a classroom during lockdown is a challenge for anyone. Help is at hand online though – BBC Bitesize has lots of activities covering all ages and subjects. At Experian, we’ve created Values, Money & Me – a free online resource to help primary pupils learn about money and economic wellbeing. The BBC has a useful round up of other free online learning resources.
Families that don’t have fixed broadband at home (and can’t afford to pay for more data) may be able to get free data or broadband to help with home schooling. Your school or council must request this for you. Full details are on the Department for Education’s website. If you think you qualify, speak to your school or child’s teacher.
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 a week if you have one child, or £35 a week 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: email@example.com. 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.
Information correct as of 5pm 6th January 2021.