This is hopefully some useful guidance for families and individuals who face financial challenges during this pandemic. The aim of this guide is to highlight the main areas which can make a difference and remind you about others that you may not yet have addressed.
Build up cash
The starting point is to create a budget showing the expected money coming in and what expenses are likely to be incurred. This way you can understand the facts of the situation before deciding what needs addressing.
Reduce costs where possible
Some expenses such as travel and eating out will automatically have reduced given the lockdown. You can try to save some cash by reducing/negotiating the following, where possible:
- Gym membership
- TV sport packages (given there is no sport being played)
- Travel season tickets can be part-refunded for the portion which is not being used
- Prepaid nursery fees/exercise classes may not be refundable but is worth checking – payments can often be converted into credit.
Build up cash
The travel restrictions may mean refunds for many holidays – securing these will help generate cash.
Another option available to those with good credit history is to take out a 0% on purchases credit card which can give 0% interest on purchases made for 12, 18 or 24 months. This is only a temporary measure and you need to be confident they can repay the amount at the end of the term as this is effectively taking on additional debt – albeit at 0% interest.
Tax
Universal Credit
Universal credit, the UK government social security payment, now covers most of the benefits available to individuals. There is a detailed guide which can be provided covering all considerations of Universal Credit. The key points are:
- A change to working hours / pay may mean that an individual can claim an increased Universal Credit payment
- Self-employed and zero-hour contract workers can receive Universal Credit
- The typical 5-week lag before receiving payments for Universal Credit can be shortened by an emergency Universal Credit loan which is then paid off by future Universal Credit payments
See: https://www.gov.uk/universal-credit
Job Seekers Allowance
Those who have lost their job may be eligible for ‘New Style Employment and Support Allowance’. This applies to people who have been employees (not self-employed) in the last 2 or 3 years.
https://www.gov.uk/jobseekers-allowance/eligibility
Child Benefit
You may want to reinstate your claims if the income of the higher paid taxpayer drops back below £60,000 for 2020/21.
Self-Assessment Deferral
The next deadline for self-assessment tax is 1 July 2020 for the second payment on account. This can now be deferred until 31 January 2021
Working from home allowance
If you are required to work from home employers are required to pay a working from home allowance to their employees. This can either be a flat rate of £6 a week or calculated as the directly incurred expenses.
House
Mortgage
Banks have been required to provide 3 months mortgage relief to borrowers as a result of Covid-19. People should contact their lender directly and can often be done online. Interest will still accrue on the mortgage for the 3-month period but no cash payments are needed to be made.
Rent
The government has brought forward protections that landlords will have to give renters 3 months’ notice if they intend to seek possession. This is in force until 30 September 2020 but may be extended.
If a renter is having difficulty paying their rent they should communicate with their landlord and reach an agreement. The landlord can apply for the 3-month mortgage relief: https://www.gov.uk/government/publications/covid-19-and-renting-guidance-for-landlords-tenants-and-local-authorities
Utility Costs
This may be a good opportunity to shop around for new gas, electricity, water and broadband providers to save money: https://www.moneysavingexpert.com/news/2020/03/uk-coronavirus-help-and-your-rights/
Council Tax
It is a case of reviewing your local council’s website and approaching them directly.
Finances
Credit Cards / Personal Loans / Overdrafts
The FCA has recently brought in a series of measures to support individuals (negatively impacted by coronavirus) who have personal finance. The summary terms are:
- Offer a temporary payment freeze on loans and credit cards for up to three months;
- Allow customers with an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months
- Ensure consumers using any of these temporary payment freeze measures will not have their credit file affected
Car Finance / Pay Day Lenders
The FCA has also brought in measures to protect consumers having difficulties who have the following financial products:
- Motor finance – Firms are required to provide a 3-month payment freeze;
- High-cost short-term credit (including payday loans) – Firms are required to provide a 1-month payment freeze
- Other credit products – Firms that provide Rent-to-own, Buy-now-pay-later, or pawnbroking agreements to provide a 3-month payment freeze. Pawnbrokers should agree not to sell an item for the 3-month period.
MOT Deferral
A car, van or motorcycle’s MOT expiry date will be extended by 6 months if it is due on or after 30 March 2020 – but the vehicle must be kept safe to drive.