Coronavirus and your family finances

Here’s the latest information on how the coronavirus crisis might affect your financial situation

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The global coronavirus pandemic has had a huge impact on our day to day lives – and also on our finances.

Now and always, it pays to ensure you are on the best deals for all household bills, from your energy bills to car insurance. You could save hundreds of pounds a year – and switching is super-fast and simple.

What government support schemes are available?

If you have lost earnings as a direct impact of coronavirus, a raft of government help is on offer. Here are the key schemes summarised:

  • If you are employed and furloughed, the Coronavirus Job Retention Scheme will pay 80% of your wages for hours not worked, up to a maximum of £2,500 a month. This scheme has been extended until the end of September 2021. From the start of July employers have been asked to contribute 10%, as part of the scheme (as the level of government support has been reduced to 70%). Then from August 1 (and through August and September), this employer contribution rises again, to 20% (when the government support is set to drop again, this time to 60%).
  • If you are self-employed, you have been able to apply for the Self-employed Income Support Scheme – a taxable but non-repayable grant. Grants have been paid in lump sum instalments each covering three months. The scheme pays 80% of your average monthly profits, up to a total of £7,500, and is open until September 2021. The fifth and final grant covers the period May to September and you will be able to apply for this from late July. To qualify, you will need to be currently eligible, and you must have traded in the 2019-20 tax year and submitted your tax return by March 2, 2021. You also need to have traded in 2020 to 2021. The final grant has the same terms as previous grants unless your trading profits have fallen by less than 30%. If that’s the case, you will receive 30% of three months average trading profits.
  • Firms in sectors which have been badly hit by the lockdown, such as retail, leisure and hospitality have been able to apply for one-off grants worth up to £9,000. Businesses need to apply for grants through their local authorities.
  • restart grant scheme was announced in the Spring Budget 2021 to help businesses re-opening after lockdown from April as restrictions start to ease. The grants are worth up to £18,000 for businesses in the hospitality, leisure and gyms and personal care sector and up to £6,000 for non-essential retail. Check your local council website for eligibility and details about how to apply.
  • The Coronavirus Business Interruption Loan Scheme  is now closed.
  • Applications for the government’s Bounce Back Loan scheme closed at the end of March.
  • Under a Pay as you Grow initiative, repayment terms on Bounce Back Loans can be extended from six years to 10 if you are struggling. Other options include pausing interest payments and loan repayments for one six-month period, and paying only interest for three six-month periods.
  • A government-backed recovery loan scheme was made available to all businesses from 6 April 2021, for loans from £25,000 up to £10 million. Government will guarantee the loans for lenders up to 80% of the loan value. This scheme is open until December 31 (subject to review).
  • The reduced VAT rate of 5% for businesses in the hospitality, hotel or holiday accommodation sector has been extended until September 30, 2021. It will then be replaced by a 12.5% reduced rate until April 2022 when it will rise to the standard rate of 20%.

For more on help for your business – ranging from Future Funds loans to relief on business rates – head over to our dedicated coronavirus business insurance page.

What payment holidays are available?

Under new rules introduced in March 2020, customers who had been furloughed, or who were struggling financially, could ask their mortgage lender for support in the form of a payment holiday. Payment holidays were also made available for personal loan and credit card customers.

It is no longer possible to apply for a formal payment holiday on your mortgage, personal loan or credit card, as the deadline to apply has now passed (March 31).

That said, there is an exception if you currently have a payment holiday in place. If so, you can have it extended until July 31, as long as this doesn’t take you over the six-month limit.

The Financial Conduct Authority has also said lenders may still provide tailored support to struggling customers.

Will a payment holiday affect my ability to get credit in the future?

Throughout the crisis, the Government has maintained that payment  holidays should not result in your credit file being negatively affected.

That said, while this credit score amnesty should mean your history has not been impacted by asking for help, lenders could still potentially look at a ‘gap’ in your repayments and view this as a sign your finances are not watertight. Bear this in mind when applying for credit going forward.:

What help is there for mortgage borrowers?

Since the beginning of April, tailored support has been available to borrowers experiencing financial difficulties. You can get this support if you are having problems for the first time, or if you are coming to the end of a payment holiday.

This support could take the form of:

  • making no payments for a temporary period 
  • making reduced payments for a temporary period
  • lengthening your mortgage term to make your payments more affordable 

Note that interest will continue to accrue during any mortgage holiday or tailored support package. This will be added onto your monthly repayments once they resume.

Use our mortgage payment holiday calculator to see what your new repayments might look like.

As mentioned above, be aware that any payment holidays or deferrals could also impact on your credit file and credit score so ask your lender about this. This could affect your ability to borrow in the future.

For more information, head to our dedicated coronavirus mortgage guide.

Credit cards, store cards, and personal loans

It is too late to apply for a payment holiday on a credit card, store card or personal loan, as the deadline passed at the end of March.

If you are struggling with debt repayments due to the coronavirus crisis, speak to your lender about getting tailored support.

This support will apply whether you are having payment problems for the first time, or you are coming to the end of a previous payment holiday.

Here are some of the measures you may be offered:

  • a further payment deferral
  • a further period of reduced payments
  • waiving or reducing interest
  • agreeing a repayment plan

The same applies if you are struggling to make payments on catalogue debt, buy-now-pay later loans, rent-to-own and pawnbroking.

Your lender should work with you to put in place a repayment plan that is reasonable and affordable based on your circumstances.

It’s important to try and pay some money rather than none at all. Crucially, never cancel or cut payments without an agreement.

If you do need tailored support from your lender this could be reported on your credit file and may impact on your ability to borrow in the future.

Car finance

You can ask for tailored help with car finance repayments if you are struggling due to the pandemic. This applies to those experiencing difficulties for the first time or those coming off existing payment holidays.

Speak to your lender about getting tailored help and putting in place an affordable repayment plan. Since 31 January 2021, lenders have been able to repossess vehicles for non payment, but this should only be a last resort. You should, where possible, work with your lender to renegotiate the terms of your finance.

If your driving licence expired between 1 February and 31 December 2020, you were automatically granted an 11-month extension, starting from the date of expiry. Licences expiring now must be renewed as normal. As licences only last 10 years, it’s important to make sure yours is up-to-date.

The government’s six-month extension for MOTs due between 30 March and 31 July 2020 has now ended. For those who took advantage in the final days, the extension expired in February. You should now book in your MOT as normal. Driving with an out-of-date MOT is illegal. If you’re unsure about the expiry date of your MOT, check it using the government MOT service tool.

Insurance premium payments

If you are struggling to make monthly payments on insurance premiums – which includes car, home, travel, life and critical illness and even boiler cover – you can contact your insurer and ask for help.

Your insurer should offer ‘tailored’ support, such as agreeing lower monthly payments, a change to your policy terms that results in cheaper premiums or a temporary payment holiday.

Head to our home insurance and car insurance coronavirus guides for more.

Interest on overdrafts

Get in touch with your bank if you are having financial difficulties with your overdraft. The FCA expects firms to provide ‘tailored’ support to customers who ask for help. This might include waiving or reducing interest payments on an overdraft, agreeing a plan to reduce the overdraft limit in manageable stages or to support customers to reduce an overdraft by transferring the debt.

Customers who have had interest payment holidays on their overdraft already should speak to their lender if they are still experiencing difficulties. Banks are expected to continue to offer tailored support.

Where borrowers need further support or access tailored help for the first time this will be reflected on credit files.

Paying for your energy

If you have a prepayment meter which you are unable to top up due to having to quarantine, firms have agreed to load credit onto your meter either remotely or by posting a top-up card to your address.

If you have a standard credit meter (ie, you pay monthly for your energy once you have used it), your supplier must offer some leeway if you are unable to pay for reasons related to coronavirus.

Help will be offered on a case-by-case basis. The key is to speak to your supplier. There is information and support for businesses and consumers who are struggling with energy bills.

Paying for your broadband

If you are struggling to pay your broadband bill, get in touch with your provider. The industry regulator, Ofcom, says broadband companies should work with customers who are finding it difficult to pay as a result of coronavirus.

If you are self-isolating, your provider should try alternative methods of communication wherever possible, if it’s unable to carry out repairs to fix broadband and landlines.

Even if you are self-isolating, you can still switch broadband provider as the process is usually carried out remotely.

What other help is available?

The government has introduced other concessions too, designed to get people over both the immediate and ongoing financial effects of coronavirus.

For renters

Government has laid out detailed guidance for renters and landlords in the pandemic.

During the coronavirus crisis, the government said it was important that landlords offered support and understanding to tenants who were trying to deal with fluctuating income.

Note, though, that the ban on residential evictions has come to an end. Bailiffs can now repossess properties with as little as four months’ notice. This is down from six months previously.

In June, the government extended the block on commercial landlords evicting retail and hospitality tenants. This is now set to run until March 25, 2022, amid fears of business failures.

Rules on evictions differ in Wales, Scotland and Northern Ireland.

For property buyers

June 30 marked the end of the suspension on stamp duty on properties costing up to £500,000 which applied in England and Northern Ireland, saving buyers up to £15,000.

The stamp duty holiday is now being phased out. From July until the end of September, the nil rate band threshold falls from £500,000 to £250,000. And then from 1 October 2021, the nil rate band will revert to its usual £125,000 level.

The exception to this is first time buyers, who will not have to pay stamp duty on the first £300,000 of a main residential property from July 1 (as the threshold for first timers reverts to its usual pre-Covid level).

The usual rates (that were in place before Covid) will apply again from October 1, 2021

  • 0% if a property costs less than £125,000 (rising to £300,000 for first time buyers)
  • 2% if a property costs between £125,001 and £250,000
  • 5% if a property costs between £250,001 and £925,000
  • 10% if it costs between £925,0001 and £1.5 million
  • 12% on anything over £1.5 million

(Stamp duty rates are different in Wales and Scotland)

Find out more about stamp duty with our guide.

For efficient home improvements

The Green Homes Grant, designed to help homeowners in England insulate their homes by offering up to £5,000 for improvements, was closed to new applicants at the end of March 2021. As yet, no replacement has been announced.

How can I reduce my household bills?

Irrespective of coronavirus, there are a few simple – and free – measures you can take yourself to reduce household costs.

Switch your energy

You could save at least £273* a year by switching to a better deal. The process takes around five minutes and, as the new provider will use the same pipes and meters as your current one, your energy supply won’t be disrupted.

*30% of consumers that applied to switch via MoneySuperMarket saved at least £273.92, April 2020 – March 2021. Excludes NI, CI & IOM.

Don’t auto-renew your home and car insurance

The same rules apply to insurance for your car and home insurance. Switching is likely to work out a lot cheaper than auto-renewing your current policy – in fact, for motor cover alone, you could save up to £235* a year.

*51% of consumers could save up to £235.93 on their annual car insurance premiums. Consumer Intelligence, March 2021.

Pay less for debt

If you’re paying expensive interest on credit card debt, consider switching the balance to a 0% balance transfer card. It means you can spread out the cost – for more than two years in some cases – without paying interest.

The new card will need to be from a different provider, so check your eligibility before you apply. You may also be charged a transfer fee depending on the deal.

Borrow cheaply

If you really need to borrow, don’t pay more for the debt than you need to. Consider a 0% purchase credit card, a 0% money transfer credit card or using an interest-free overdraft.

Switch mortgage deals

If your current mortgage agreement is due to expire, look at remortgaging to one with a lower rate of interest. Alternatively, find out if your current lender can offer a better deal – known as a product transfer. Savings can amount to hundreds of pounds a month depending on the size of your loan.

If you are worried about money

Even if you’ve taken advantage of all the help you can, you may still be struggling to make ends meet – especially if you have been long-term furloughed or lost your job entirely. Equally you may be worried what will happen when available government help and schemes come to an end.

Worrying about paying bills can feel crushing – but take comfort from the fact you are not alone. Free, expert and impartial help is available through registered charities such as StepChange.

Visit its website or call its experts for free on 0800 138 1111. They will tailor advice to your individual situation and provide help for as long as you need it.

The charity has warned that it has encountered imposter firms which are most prevalent online – so ensure you click through from the official link provided, above.

Coronavirus and travel

In England:

All holiday accommodation, including hotels, hostels B&Bs can now open – in addition to self-catering accommodation which opened up in April. Six people from different households, or any number from two households, can stay together overnight. The same rules apply when it comes to staying in a private home.

Different rules apply in Wales, Scotland and Northern Ireland.

The rules on travelling abroad are quite a moveable feast at the moment, making it very hard to make travel plans or to know whether or not to book a family holiday.

Put simply, you are free to travel to green list countries, provided you take the necessary tests and the country allows inbound travel. However, to prevent new Covid variants from entering the UK, people are advised against travelling to red list countries.

You are also now free to travel to amber list countries, but the quarantine rules depend on whether you’re fully vaccinated. Adults who have been fully vaccinated in the UK don’t have to self-isolate upon their return from an amber list country. However, if you’re not fully UK vaccinated, or you’ve been in France in the 10 days before you arrive in England, you must still quarantine for 10 days on your return.

Before planning any trip, take a look at the rules in place, such as quarantine and testing – both at your destination and here in the UK. Gov.uk is a useful starting point.

For more information on travel – and travel insurance – read our guide.

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