25 Mar 2020
Financial Help & Rights – Latest News
1) SELF EMPLOYED/FREELANCE? – updated 26th March 2020, 5.30 PM:
Self-employed people must wait until June to get 80% of their earnings covered by the state, up to a maximum of £2,500 a month for three months, in response to the coronavirus crisis.
The chancellor, Rishi Sunak, said the plan would be backdated to March and would cover those earning up to £50,000, or 95% of the self-employed. It was “one of the most generous schemes anywhere in the world” and ended weeks of uncertainty for those who work for themselves, he said.
The taxable grant will be based on the average monthly profits of the self-employed over three years, so people will need to have filed a tax return to be eligible.
Speaking at the government’s daily press conference, Sunak said: “The government will pay self-employed people who have been adversely affected by the coronavirus a taxable grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month.”
The grant is equivalent to the help offered to salaried workers, after Boris Johnson had said there would be parity. Sunak said it would be available to those who make the majority of their income from self-employment so only the “genuinely self-employed” would benefit.
he key highlights of the scheme are given below:
- Taxable grant of 80% of average trading profits of last three years, capped to £2,500
- To be eligible the average trading profits for last three years should be less than £50,000 and more than half of the income should come from self-employment
- The scheme will be available for 3 months and to be extended if required
- To prevent abuse, only those who have filed tax returns for year ended 5th April 2019 will be eligible
- Four weeks of extension for those who are late in filing their returns for 2018/19 and can submit by 23rd April 2020
- Scheme will be realistically available by June-2020
- HMRC will contact those who qualify for the grant.
2) EMPLOYEES. Can’t go to work or have no work to do? Ask your employer to ‘furlough’ you and the government will cover 80% of your salary up to £2,500/month. This is officially called the Coronavirus Job Retention Scheme, and it means employers can choose to put staff who can’t work on ‘furlough’ (on hold) – and then the government will cover their salary.
“Think of this like a job being put on standby. The idea is you go into sleeper mode during the crisis, and then when it’s over, they can instantly restart things and get the economy running again at speed”.
It’s up to employers to decide and define who is furloughed. It could be because you’ve no work to do (e.g. you work in a closed restaurant), or you have to be at home to look after the children or you’re self-isolating.
The key thing to understand is the state is looking to support people. It wants this to be a broad sweep of support to gather people up. It’s looking to embrace people who need it, not loophole them out.
3) If you lost your job due to coronavirus, or were in the process of changing jobs, furlough may still be available. Before the furlough support was announced, many people were laid off by panicking firms. If that happened, speak to the firm – they are allowed to take you back on, to furlough you. Of course, this is up to employers, and all employers should do what they can.
4) Don’t dismiss universal credit. The changes are bigger than you think – especially for housing costs. Universal credit is a benefit available to many who are employed, self-employed, unemployed or on low incomes (but usually not pensioners), provided you’ve less than £16,000 savings in your household.
Last week, most people focused on the ‘£1,000 more a year’ increase, which of course is only £20/week, but that’s just the standard allowance. The housing allowance – which can cover rent, mortgage interest and service charge – has been unfrozen, so payouts can be larger (owner-occupiers can get help via support for mortgage interest payments). For example, in one London borough, for a two-bed home the max was £1,390/month, it could now be as high as £1,550/month. Overall, some may be eligible for £1,500+/month, and as there’s no tax taken off. That’s getting close to the maximum furlough payment for employees.
5) ZERO-HOURS CONTRACT? Help depends on how your contract is structured. If you’re paid through a payroll, you could be eligible for help as a furloughed employee (if so, your salary may be based on your February income – though that’s to be confirmed – and there may be wriggle room if that was a particularly bad month). Otherwise, you may be due self-employment help and universal credit support.
6) Renters, you can’t be evicted for 3 moths, and landlords can get help too. As well as universal credit housing help, new rules mean landlords in England and Wales won’t be able to start new eviction proceedings for at least the next 3 months, protecting private and social tenants.
Private landlords are also now eligible for a 3 moth buy-to-let mortgage payment holiday if their tenants are experiencing financial difficulties. Technically they needn’t pass this on to their tenants, but morally they should and most will, so speak to your landlord if you need help. If your landlord doesn’t have a mortgage, there’s no help and they may be relying on your rent as their income. If so, and you’re both struggling, try to find a way to “meet in the middle” and work through it together.
7) 5 major lenders will let you apply for a mortgage payment holiday ONLINE. If you are struggling to pay your mortgage, lenders will allow you to take a break on paying for 3 months. Now many let you apply online, and some hear back in minutes. For full help, including exactly how mortgage holidays work, see how to apply for a mortgage payment holiday info.
8) The UK base rate was cut again, to 0.1% – the lowest in 325 years. Check your mortgage rate and sort your savings. Those on trackers and variable rates should see their mortgage payment reduced (see mortgage lender-by-lender cuts) by about £40/month per £100,000 of mortgage if you add both cuts in the last two weeks. For those free to remortgage, it is also worth checking if you can cut your mortgage cost.
9) HSBC is giving £300 overdraft buffer – others may follow. Terrible timing means from Monday 6th April (earlier for some), regulation changes have resulted in almost all lenders charging about 40% EAR on overdrafts, nearly double high-street credit cards, making overdrafts the new danger debt. HSBC has said to help with coronavirus, it’ll automatically increase buffer zones (which let you go overdrawn interest-free) on its Bank and Advance accounts, from £25 to £300 for 3 months from Thursday.
10) Energy bill help. Disconnections are suspended for customers of all providers – most are pushing back bill dates (and British Gas has confirmed it’s removing late payment charges) for those struggling financially.
11) Sky Sports customers can now pause their subscription. Subscribers to Sky Sports (though not BT Sport) can now pause Sky Sports payments while sport is suspended.
12) Almost all train tickets are now refundable. Anyone with an advance ticket can now get a refund. Season ticket holders can get the unused portion of their ticket back but may have to pay a £10 admin fee. See how to get a rail refund.
13) Shops are extending their returns policies. For example, H&M upped its from 28 to 100 days for items bought in-store and online, so you’ve time to get things back during lockdown. See who’s extended return rights.
14) Struggling with council tax? Speak to your local authority. Some councils are offering forbearance. See council tax holidays.
15) Contactless card limit increasing from £30 to £45 on 1st April. This is to reduce personal contact, though it may take some time to filter through to all retailers. Contactless limits often don’t apply to mobile phone contactless payments. See contactless update.
16) Can’t get to your MOT? Changes possible this week. If your MOT runs out, and you can’t get an MOT as the local test centre is closed/you’re stuck self-isolating, currently the only option is to get a SORN and take your car off-road. New changes are expected this week, likely to soften this stance.
17) Life insurance & income protection should still cover coronavirus. Not nice to think of, but life insurance policies will still cover coronavirus. Yes (unless someone took one out while they had it). The same should be true with income protection policies. However, most critical illness policies won’t define coronavirus as a critical illness. See insurance latest.
18) Package holiday or flight cancelled? You’re due cash, not vouchers – but that could change.When package holidays or flights are cancelled, the rules state you’re due a full refund. Yet many firms are currently trying to direct you towards taking vouchers. Of course, if you’re happy with vouchers then take them, as we need to support travel firms right now – but if not, you are due cash. Enforcing that is tough though, as it may need court action. Full help in our Coronavirus Travel Rights guide.
19) Water bill problems. Trade body Water UK is today announcing it is working with water firms to arrange payment breaks, payment holidays and more for those struggling.
For more information visit Coronavirus: Financial Help & Rights