News

Personal Finances
31 March 2020

The ongoing COVID-19 pandemic is having a significant impact on all aspect of individual’s lives, not least their personal finances.

During this difficult period, it is likely that your staff may look to you for advice if their own income is affected by the economic impact of this virus.

To help them make sense of your rights and what financial support may be available to them, we have prepared a useful summary below:

Statutory Sick Pay

Anyone who contracts Coronavirus, or who is required to self-isolate under the Government’s current guidance may be entitled to statutory sick pay (SSP). SSP is paid at a rate of £94.25 per week.

Full details of the new measures relating to SSP can be found on our COVID-19 Business Support Hub by clicking here.

Self-employment 

If you cannot work due to Coronavirus and are self-employed you are not likely to be eligible for sick pay and may find that the volume of work available to you subsides.

Although you may able to access the newly announced Self-Employment Income Support Scheme from June, you may also require additional help via the benefits system.

If you find yourself in this situation you can apply for Universal Credit and/or apply for New Style Employment and Support Allowance (ESA) to top up your income.

It is strongly advised that you don’t delay making a benefit claim if you think you may be affected by Coronavirus. To make a claim you will not be required to produce a Fit Note.

The Government has confirmed that self-employed individuals can claim ESA from the first day of illness or self-isolation instead of waiting for seven days, but it may take several weeks for a claim to be processed under Universal Credit.

Through ESA you can claim up to £73 per week – the amount won’t be affected by either you or your partner’s savings or income, though if you get a private pension worth more than £85 per week it could be reduced.

Payments for ESA are made fortnightly in arrears. Claimants who meet the criteria should, therefore, receive their first payment after two weeks.

Those who are self-isolating will not be required to go to a jobcentre to begin this process as it can all be done online.

To help those applying for Universal Credit, the Government has removed the Minimum Income Floor.

Typically, if you’ve been running a business for a year or longer when you claim Universal Credit, the Government works out your benefit payment based on the minimum income floor.

Removing the floor means that some claimants will get extra money to make up for lost earnings if they decrease due to the Coronavirus.

More than 500,000 people have made a new claim for Universal Credit in the last week or so to cover their lost income. If you need to make a claim, it is therefore advised that you do so at the earliest opportunity.

For further advice on the options available to you and to make an application, please click here.

Further measures to support those in self-employment are expected imminently.

Tax

HM Revenue & Customs (HMRC) has launched a new helpline to support individuals that are concerned about paying their tax due to disruption related to Coronavirus.

Further guidance on these arrangements is also available on our COVID-19 Business Support Hub.

Mortgage holiday 

During this crisis, some households will see a decline in their household income, which may make paying bills a challenge.

To help with this, lenders have agreed with the Government to offer tolerance and help on mortgage payments.

Those struggling with their mortgage payments will be given a three-month ‘holiday’, allowing customers a temporary break from making payments during this time.

Banks are offering different solutions to this ‘holiday’, with some extending the term of the mortgage, while others are adjusting payments so that unpaid months are spread over the life of the mortgage, meaning that borrowers experience a very small uplift in future payments. Be aware that the shorter the term left on your mortgage the larger the increase will be in your future monthly payments.

It is advised that you speak with your bank in advance if you anticipate that you may need to make use of this facility so that you are clear on the terms being offered.

Lenders may wish to confirm the following key points to satisfy their eligibility criteria for a mortgage payment holiday:

• Your finances have been affected by Coronavirus
• You are up to date with your monthly mortgage payments and not in arrears
• You have consent from everyone named on the mortgage

Some lenders have already contacted mortgage holders to offer a mortgage holiday, which in some cases can be requested online via an application form or a fast track approval process. Requesting a holiday should not affect your credit rating.

Loans and credit cards

Although the Government hasn’t asked banks to help those with loans and credit card payments, many banks have already announced that they will offer support here too for those struggling with debts.

Most banks and credit card firms have confirmed with the MoneySavingExpert website that they will allow emergency credit limit increases if necessary, while others are offering repayment holidays and a few will waive fees for missed payments.

During these uncertain times, it is recommended that you speak with all lenders to see what assistance is offered instead of having missed payments without permission, which may incur fees and affect your credit score.

Savings and investments

Banks are now making it easier to access fixed-rate savings accounts without penalty to help those affected by the pandemic.

According to the MoneySavingExpert website, nine banks have so far offered this facility to savers, so it is worth checking with your bank or building society to see whether your money can be accessed easily.

During uncertain economic times such as these, if you hold any investments it is best to seek specialist advice from an independent financial adviser to make sure that you are not adversely affected. If you do not have an adviser then we can recommend somebody suitable.

Care arrangements 

Schools across the UK are closed and many will be worried about parents and grandparents who have been asked to employ social distancing and self-isolation.

Due to these arrangements, it may be necessary to take time off work to care for another person. Whether workers have a right to be paid will depend on the terms of their contract.

There is an implied term (unwritten) in all employment contracts that workers must obey reasonable instructions from their employer.

The Advisory, Conciliation and Arbitration Service (ACAS) has called on employers to listen to the concerns of their staff but said that workers who refuse to follow instructions could still face disciplinary action.

Where an employee has urgent caring responsibilities, they may be able to take a ‘reasonable’ amount of time off for dependents but this does not have to be paid unless stipulated in a person’s contract.

Renters

The Government has introduced new legislation that has suspended the eviction process for tenants for at least three months to help those struggling with their rent.

To ensure buy-to-let landlords aren’t adversely affected they will be able to make use of the same three-month mortgage holiday as regular lenders.

Renters may also wish to check whether they are entitled to any financial help with their housing, which could be from benefits such as Universal Credit. You should also check whether you could apply for a discretionary housing payment from your local council.

Insolvency

Many of those affected by the closure of companies, debts or loss of investments may need to consider personal insolvency options, which include:

• Individual voluntary arrangement (IVA)
• Debt relief order (DRO)
• Bankruptcy

If you are considering taking any of these steps in the coming months it is vitally important that you seek professional advice.

Here to Help 

The Government continues to make new announcements daily and has said it will do ‘whatever it takes’ to help individuals through this crisis.

If you are concerned about your finances you must speak to a professional adviser to see what options may be available to you. To find out how our dedicated team can help you, please contact us today.