While these are uncertain times, there’s lots of financial support available from the government to help you get through. We’ve asked award-winning financial journalist Laura Whateley, to give us an overview of what’s available, who’s eligible, and what you need to do next
There is no escaping that these are uncertain and scary times, especially when it comes to paying the bills. This is true whether you’re in a full-time job, now working from home or facing being furloughed and worried about what a recession could mean for your finances, or are self-employed, with no cash coming in as jobs are paused, indefinitely.
Fortunately, there is some help out there, from both the government and finance providers, to tide you over for the coming months.
Here’s what you can apply for and how…
If you think you’re facing redundancy…
The Coronavirus Job Retention Scheme, which will be available from the end of April 2020, but backdated to March 2020, is designed to enable employers to “furlough” their staff if there is no work to do as a result of the pandemic. In other words, bosses can temporarily put you on a leave of absence but keep you on the payroll, instead of making you redundant.
It’s best to speak to your boss or HR/People team if you think this could apply to you and you haven’t yet had this formally communicated to you. Furloughed staff are entitled to a grant of up to 80 percent of their monthly wage, up to £2,500 a month, for at least three months, backdated to March 1 2020.
Your employer will have to claim the benefit, via an online service, which will be available by the end of April, and then transfer it to you. They may then choose to top this up. Your employer should write to you confirming you have been furloughed, keep hold of this letter.
If you are self-employed…
The Self-employment Income Support Scheme will also pay 80 per cent of your income, up to £2,500 a month for at least three months if you earn no more than £50,000 a year trading profit as a self-employed person, and at least half of your income comes from self-employment. The money is a grant that you have to pay tax on.
The good news is you should get the grant regardless of whether or not you are still able to work. Unfortunately for those who are very newly freelance, this only applies to the self-employed who have submitted tax returns in the year 2018-2019, and doesn’t apply to those who have a limited company and pay themselves in dividends. The amount you get will either be based on the amount you took home in 2018-2019, or an average of the previous three years of your self-assessment returns.
There’s no need to do anything, if you are eligible you will be contacted soon, and invited to apply online though gov.uk (beware the inevitable scammers texting or emailing you claiming to be from HMRC, don’t trust them). The grant will be paid directly into your bank account in one instalment. The bad news is, you won’t get this until June.
If you have no cash…
For self-employed people who can’t wait that long, you can dip into your tax savings.
The government has agreed to waive the July 31 2020 self-assessment tax payment deadline so you don’t owe anything until January 31 2020, though of course you’ll still have to come up with the money, then.
Again, no need to do anything, you won’t be penalised as you would be normally for failing to pay this summer.
Or you could apply for universal credit…
If you are not eligible for the government schemes…
If you’ve only just become self-employed, or because you’ve already been made redundant, your options are sadly limited.
Whatever your previous salary, if it has suddenly dried up you can apply for universal credit to cover both a lack of income and housing costs. The amount you will receive has been increased slightly, to £409.89 per month for single people aged over 25.
The more significant increase is in the housing element of universal credit, which you can use to pay mortgage interest or rent. The local housing allowance rates have risen to cover up to 30 per cent of market rent in your area.
The problem with trying to claim universal credit is that you are not eligible if you or your partner has any more than £16,000 of savings, which self-employed people might if they are saving for their tax bill. Even if your savings are more than £6,000, how much universal credit you receive will be reduced.
You can check to see how much universal credit you might receive, and apply, at gov.uk. But be warned: a lot of people are trying to do this at the moment so the site is experiencing delays.
If you can’t work because you have Covid-19…
You may be eligible for statutory sick pay, though sadly it doesn’t amount to very much at £94.25 a week. The government has brought forward how soon you can receive it though, from day one of being ill, rather than the usual day four.
You need to ask your employer for this, and you will probably need proof, in the form of an isolation note. You can get one at 111.nhs.uk/isolation-note/
If you can’t pay your mortgage or your rent…
The government has asked banks to offer all borrowers a three month mortgage payment holiday, which means that if you are struggling to pay your mortgage right now you can put it on pause. You’ll still owe the money, and interest, but it will be added on to your overall loan, extending the time you have to repay. Do not just stop paying your mortgage, though. Make sure you agree the payment holiday with your bank first.
If you cannot afford to pay your rent, speak to your landlord immediately. Landlords should be entitled to a payment holiday on their buy-to-let mortgage, if their tenants are in financial difficulty. The government has extended the notice period for eviction to three months, too, so you cannot be kicked out of your home during the coronavirus outbreak for not paying rent.
If you’re a Zopa customer and worried about how coronavirus will affect your loan repayments, please see our blog for information on how we can support you through these challenging times.
Laura Whateley is a freelance writer and author of Sunday Times bestselling book Money: a user’s guide. She has written for a wide variety of publications including The Times, The Guardian, Grazia, Refinery 29, Elle and Stylist Magazine. All views are her own.