Coronavirus and your family finances

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

Family finances illustration

In this article:

The coming months will see England, Wales, Scotland and Northern Ireland gradually emerge out of lockdown.

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 up to £2,500 a month. This scheme has been extended until the end of April 2021
  • If you are self-employed, you can apply for the Self-employed Income Support Scheme – a taxable but non-repayable grant. Grants will be paid in lump sum instalments each covering three months. The next grant covers a three-month period from the start of November 2020 until the end of January 2021. You will be paid 80% of your average monthly profits, up to a total of £7,500. To qualify you will need to be currently eligible for the scheme and actively trading. The second grant will run from February 2021 until April 2021
  • Firms in sectors which will be badly hit by the lockdown, such as retail, leisure and hospitality can apply for grants worth up to £9,000
  • If your self-assessment tax bill is due by 31 January 2021, you can now opt to pay it over the following 12 months instead
  • If you run your own small- to medium-sized business, you could apply for the Coronavirus Business Interruption Loan Scheme. The loan is interest- and fee-free for the first 12 months, during which time you will also not be required to make loan repayments
  • Alternatively, you can apply for the government’s Bounce Back Loan which lends up to 25% of your turnover up to a maximum of £50,000. There is no interest or fees to pay for the first 12 months
  • Under a new Pay as you Grow system, repayment terms on both the Coronavirus Business Interruption Loan Scheme and Bounce Back Loans can be extended from six years to 10 if you are struggling

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?

The financial regulator, the Financial Conduct Authority (FCA) has said lenders must help borrowers struggling with the financial impact of coronavirus, including offering payment breaks where necessary. We’ve set out the guidelines below:

Mortgages

Mortgage borrowers who are struggling financially due to the coronavirus pandemic but have not yet had a payment holiday can apply for a deferral on their monthly payments. Payment holidays can last up to six months.

Borrowers who already have a payment deferral in place for less than six months can reapply to extend their payment holiday. This means customers can have a payment holiday up to a maximum of six months.

Mortgage borrowers who have benefitted from a six-month payment holiday but are still experiencing financial difficulties should speak to their lender. The FCA has proposed that lenders must offer further ‘tailored’ help on a case-by-case basis. However, borrowers who take this further round of support are likely to have it logged on their credit report.

Interest will continue to accrue during any mortgage holiday which 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.

And for more information, head to our dedicated coronavirus mortgage guide.

Credit cards, store cards, and personal loans

You can apply to your credit card, store card or personal loan provider for a payment holiday which could last up to six months.  This is for borrowers who have not yet had a payment deferral under the previous FCA guidance which ended on 31 October. 

Borrowers who have already had a payment holiday under the previous rules can apply again for a second deferral if they are still struggling.

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

Car finance

You can apply for a payment holiday on your car repayments which can last up to six months. Those who have already benefitted from a payment break can also apply again for a further deferral. Vehicle repossessions are also held off.

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. Licences expiring now must be renewed as normal.

The government’s six-month extension for MOTs due between 30 March and 31 July 2020 has now ended, and you will need to book in your MOT as normal. 

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.

Help could take the form of a temporary reduction in cover, a change of policy that results in cheaper premiums, or a short payment holiday.

Note however that, under FCA proposals, you may NOT be able to extend an existing insurance premium payment holiday beyond three months. Instead your insurer should offer ‘tailored’ support in other ways, such as agreeing lower monthly payments.

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 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. The FCA has said it expects banks to get in touch with customers who have already received temporary support to see if they still need help.

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

If you have not requested an interest payment holiday on your overdraft, bear in mind you could soon be paying more in interest.

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, but energy regulator, Ofgem has ruled that energy firms must continue to supply gas and electricity to customers who are not able to pay.

Paying for your broadband

If you are struggling to pay your broadband bill, get in touch with your provider – industry regulator, Ofcom has ordered broadband companies to keep customers connected where they are struggling to pay as a result of coronavirus.

Some providers, including BT/EE, Openreach, Virgin Media, Sky, TalkTalk, O2, Vodafone, and KCOM, have also agreed to remove data allowance caps on all existing fixed broadband services, as well as offer improved mobile and landline packages.

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

You will still be able to switch broadband provider as the process is usually carried out remotely.

If you are switching from a cable supply however, there could be a delay due to a backlog of requests resulting from lockdown.

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

Tenants in private and social housing in England and Wales are protected from eviction during the national lockdown. Government has laid out detailed guidance for renters and landlords.

Since 29 August 2020, with the exception of the most serious cases, landlords are not able to start possession proceedings in England unless they have given their tenants six months’ notice.

Government has said it’s important that landlords offer support and understanding to tenants who may see their income fluctuate during the pandemic.

In Wales and Scotland, tenants must already receive a minimum six months’ notice while in Northern Ireland it’s 12 weeks.

Private and social housing tenants in Northern Ireland and Scotland will continue to be protected from eviction until 31 March 2021.

For property buyers

The starting threshold at which stamp duty kicks in has been lifted from £125,000 to £500,000 in England and Northern Ireland until 31 March 2021, saving buyers up to £15,000.

The threshold for the equivalent property taxes in Wales and Scotland have been raised to £250,000 until the same date.

Find out more about stamp duty and the temporary changes with our guide.

For efficient home improvements

Homeowners and landlords in England can apply for a Green Homes Grant from late September to put towards the cost of energy-efficient improvements.

The scheme will pay two-thirds of the cost, capped at £5,000. Low income households will be able to claim for the full amount of the work up to £10,000.

For general spending

The rate of VAT applied on most tourism and hospitality-related activities including food and accommodation has been cut from 20% to 5% until 31 March 2021.

How can I reduce my household bills?

Irrespective of coronavirus, there are a few simple – and free – measures you can take of your own to reduce the money that leaves your household.

Switch your energy

You could save at least £306* 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 could save at least £306.38, March-December 2020. 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 £217* a year.

*51% of consumers could save up to £217.95 Consumer Intelligence, December 2020

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 that you are far from 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’s encountered imposter firms which are most prevalent online – so ensure you click through from the link provided, above.

Coronavirus and travel

Travel and overnight stays in self-catering accommodation (single households only) within England could be allowed from April 12 (if Government sticks to its current roadmap for ending lockdown). This if for people living in England. The rules and dates for Wales, Scotland and Northern Ireland are likely to vary slightly.

English hotels, B&Bs and hostels could then open from May 17, along with overseas travel, although government has said this is subject to review.

If you do need to travel overseas before restrictions ease (and are legally permitted to do so – due to work or education, for example), even if you are returning to a place you’ve visited before, you should look at the rules in place – such as quarantine and testing - at your destination and the Foreign, Commonwealth and Development Office (FCDO) travel advice.

You’ll find more information around travel and travel insurance in our guide.

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