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 three-month payment holidays to people who’re struggling to meet monthly payments due to coronavirus.
You have until 31 October, to ask for a three-month payment holiday on most regulated lending. Payments holidays arranged before this date won’t appear on your credit report or affect your score.
After 31 October, lenders will typically offer, ‘tailored support’ that suits depending on your circumstances. Any payment holidays or reductions agreed after this date will appear on your credit report as an arranged change. This mark will stay on your report for three years after the arrangement ends. Also, you’ll probably see your arrears build up (‘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.
If you have an arranged overdraft, you have until 31 October to ask your provider for an overdraft of up to £500 interest-free for three months. If you’ve already received this support you can apply, before the same deadline, to request it for another three months. If this is the case, your lender will contact you to let you know what your options are. You can discuss with your lender the options for increasing overdrafts above a £500 limit, but be aware there can be high interest charges.
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. On 12 May the government extended the furloughing scheme to last until the end of October.
Firms can rehire and furlough staff who left their employment after 28 February 2020. This is applicable whether you lost your job as a result of the outbreak or if you left voluntarily.
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.
From July onwards, claims to the government’s furlough scheme will be restricted to employers currently using the scheme and employees who were on the furlough scheme before 10 June.
A new Government Job Support Scheme has been announced, which will replace the furlough scheme when it ends on 31 October. It will help the employees of businesses facing lower demand over the winter months due to coronavirus, by protecting their jobs. The scheme kicks off on 1 November 2020 and will run for 6 months.
To be eligible for the scheme, you'll only need to work at least 20% of your hours, so if you work just one day a week, you would qualify. You also need to have been working for your employer either on or before 23 September 2020. The employer contribution to those hours you’re not working will be just 5% and the Government will cover 62%. That means as an employee, you would forgo the remaining third of your salary for unworked hours. Overall, that means those on the scheme will earn at least 73% of their usual pay – unless they earn enough to hit the Government's contribution cap, which equates to around £37,500 per year.
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.
Information correct as of 5pm 19th October 2020.