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It’s natural to worry about money right now, and if your income has been affected by Coronavirus you might be thinking about borrowing money. Please take a look at our guide on borrowing money safely during Coronavirus – it’s essential that if you do borrow money during the pandemic you do so from reputable lenders and sources that you can trust.
Whilst your physical and mental health is, of course, the priority right now, its also really important that you look after your financial health too and don’t borrow from sources that could potentially cause you to fall into debt.
From Tuesday 17th March, banks agreed with the Chancellor that they will offer ‘forbearance’ (tolerance and help) on mortgages.
This means they should offer those struggling, a 3 month ‘holiday’, allowing customers a temporary break from having to make mortgage payments during this time. (It’s worth noting this is a voluntary agreement with banks – it is not compulsory for them to offer mortgage holidays).
A mortgage holiday is aimed at those who are financially struggling. You won’t need to ‘prove’ that Coronavirus has impacted your finances, however, to apply you’ll need to be up to date with all your mortgage payments already.
Lenders will have to check that taking a mortgage holiday won’t make paying off the mortgage unaffordable for you later down the line. For those already in mortgage arrears or financial difficulties, lenders will consider what other options they can offer you, but you’re unlikely to be offered a mortgage holiday. You should always speak directly to your mortgage lender.
To apply for a mortgage holiday, speak to your lender at your earliest opportunity – the more warning you give, (hopefully) the more breathing space you’ll have if you do get into financial difficulties.
It can vary from bank to bank, but generally there are 2 options:
Try the mortgage holiday calculator to help you understand how your payments could change due to a mortgage holiday.
For private renters, the government has announced that Local Housing Allowance will cover at least 30% of market rents in your local area. Your landlord will not be able to start eviction proceedings against you for at least three months, which should give you some time to consider the best option for you.
Moreover, your landlord should take every step to ensure that you stay in your home, even in the event that you’re unable to meet your rent payments after three months. They’ll be expected to take into account your financial circumstances (as well as the current global situation) and work out a fair repayment plan for you before any eviction proceedings are started.
You should talk to your tenancy support officer if you’re a social housing tenant – they may be able to help you work out a fair and affordable payment plan. If you rely on Universal Credit to cover your rent, talk to your work coach about how to keep your rent payments up to date.
If you’re an employee that earns a minimum of £118 a week then you’ll be able to get Statutory Sick Pay (SSP) for up to 24 weeks. Your employer will now be obliged to pay this from day one of you being on sick leave instead of day four because of Coronavirus.
In the event that you don’t have an employer, or are self-employed, or can’t get SSP for any other reason, then you’ll be able to apply for Universal Credit on the government website.
Payment breaks were announced for mortgage owners on 17 March 2020, and it’s likely that more payment breaks will be announced in the coming days to give relief to people who rent their homes and for those who pay council tax.
Most major lenders of unsecured credit such as credit cards, unsecured loans, store cards and catalogues are now giving 3 month payment holidays without penalty. You can find out more about this in our section on what creditors are doing to help.
Car finance – the FCA has proposed payment freezes for anyone with a car finance deal and if approved, firms would need to give a 3-month payment freeze to customers who ask for one. Lenders won’t be able to repossess the customers’ vehicles, however, interest will continue to accrue throughout this time.
Payday loans – the FCA proposals would see payday loan customers receiving a shorter, 1-month interest-free payment freeze.
Buy-Now-Pay-Later agreements – any customer with this type of agreement in place or a rent-to-own or pawnbroking agreement, will be given a 3-month freeze, although interest will continue to accrue.
A final decision on the above proposals is expected on Friday 24th April, with the rules coming into force shortly afterwards.
The three big UK credit reference agencies, Experian, Equifax and TransUnion, have agreed that having a temporary ‘payment holiday’ or ‘emergency payment freeze’ with your bank or lender because of Coronavirus problems won’t harm your credit score.
This was already the case for mortgage payment holidays but now also applies to unsecured debts such as loans, credit cards, catalogues and store cards.
Whilst your payments are stopped or reduced, the status of your account won’t be affected, meaning that your credit score will remain unchanged.
It’s worth noting that these changes must be agreed by your lender so they become authorised changes. If you just stop paying, or pay less then the normal amount or cancel a direct debit, then that will be reported on your credit report as missed payments. These ‘unauthorised’ changes will harm your credit score. So speak to your lender as soon as you can!
The government has introduced legislation that prevents landlords from starting eviction proceedings against tenants who can’t pay their rent for the next three months, although this may be extended further in the future. Landlords have been encouraged to work with their tenants to come to a fair solution; this might involve coming to a repayment arrangement in the future if you’ve lost your job because of Coronavirus, or making reduced payments towards your rent temporarily until you find new employment.
The UK government has just announced plans to amend the emergency Coronavirus bill to cover self-employed people for up to 80% of their net monthly earnings, up to the value of £2,500. The amount will be based on their earnings averaged over the last three years, bringing the support for freelancers and the self-employed in-line with that offered to employees.
If you’re a self-employed worker with less than three years of earnings, then the government will look at what earnings you have got, although the Chancellor stated on the 27/03/2020 that those without at least one year’s worth of earnings won’t be able to qualify for the scheme. The scheme is open to those who earn under £50,000 a year, and any grant received must be declared on tax returns by January 2022.
The first payment for self-employed workers will be received in June, and will be backdated for three months so that self-employed workers will get three months’ worth of payments at once to prevent them from missing out on their earnings. The money will arrive directly into self-employed workers’ bank accounts from HMRC.
If you’re worried about what to do for money until then, the government’s advice is to take advantage of all of the other support packages currently available – these include mortgage and rent holiday payments, increases to Universal Credit, Employment and Support Allowance and Jobseeker’s allowance. There are also other measures that your bank will have introduced to help you manage during the pandemic.
You might also qualify for the Business Interruption Loan Scheme to keep help you to continue to trade – this provides business owners with a loan ranging between £25,000 and £5,000,000. The loan is interest-free for the first 12 months, although after this an agreed interest rate will be applied. It’s important to remember that this is a loan and not a grant, and you’ll have to pay back everything you borrow if you choose to apply for this.
Yes, the Chancellor announced that £330bn will be pumped into the economy to help keep small businesses afloat. No business will pay VAT from March until mid June and you’ll have until the end of the financial year to repay those bills.
The business rates holiday will be extended to all firms in the hospitality sector (pubs and restaurants). Funding grants between £10,000 and £25,000 will also be offered to small businesses. The Coronavirus Business Interruption Loan Scheme will be available in the coming weeks and and loans will be interest free for 12 months.
It’s easy to feel scared and anxious given the current situation. Whilst there aren’t yet any charities offering out grants due to Coronavirus, there are many you can contact if you’re struggling:
Age UK – The elderly in our communities are arguably the most at-risk of catching coronavirus. When coupled with the time spent in self-isolation, many will be left feeling low and deflated. Throughout the outbreak, Age UK have continued to provide support and advice to thousands of over-60s, be that about health, care or money worries. Get in touch with them here, either for yourself or on behalf of a loved one.
The Trussell Trust – Pledging to end UK hunger, The Trussell Trust has over 1,200 food bank centres nationwide, all of which they use to provide emergency support for those who need it. As the Coronavirus situation worsens, they continue to offer help and support for whom buying food is a daily struggle. Find your nearest foodbank here.
Mind – Being asked to quarantine, stay at home or avoid other people can be tough for those of us who need social interaction in our lives. Mind have put together a self-isolation section on the website to help those who are struggling with being stuck indoors. As always, they are always available to speak to should it all become too overwhelming. Get in touch with mind here.
Loss of income will undoubtedly put many households under financial pressure. As a result, three-month mortgage payments are available for those who are struggling – this should hopefully take some pressure off paying bills.
If you’re privately renting, speak to your landlord. Organisations have been urging landlords to ‘work positively’ with tenants. So, if you’re struggling to pay your rent due to virus-related issues, it’s important to keep up a dialogue with your landlord and work out a plan as soon as possible. The government will cover at least 30% of market rents in your local area.
As it stands, no plans are in place for council tax reductions or payment holidays. Having said that, last week’s Budget reported that the £500m Hardship Fund would be used alongside council tax support schemes to help vulnerable households – this could well lead to council tax deduction.
We’ll keep this section of our website updated as soon as updates come in, so be sure to check back in for up-to-date guidance and financial help during the Coronavirus crisis.
Sadly, there’s been a large rise in Coronavirus-related fraud recently, which might explain why you’re getting so many calls.
These frauds can range from fake calls from your bank offering so called ‘goodwill payments’ to people claiming to be selling in-demand goods like hand sanitizer. It’s important that you never give your details out to anyone who calls up asking for them in return for a special offer or promise of cheap goods, with many people viewing the Coronavirus crisis as a chance to scam money out of people who, understandably, are worried about what to do at the moment.
To ensure that you keep your finances safe, check out our guide on how to spot Coronavirus fraud.
If your income has been affected by the Coronavirus pandemic and you’re not receiving your usual pay, then you might be worried about how you can pay your gas and electricity bills as normal. Fortunately, energy suppliers in the UK have taken steps to ensure that your gas and electric will not be shut off if you can’t pay, either due to you self-isolating and receiving sick pay or not receiving your usual income. If you’re a:
British Gas customer the latest advice is to call British Gas’s helpline if you’re unable to make a payment.
E-ON customer then you’ll be able to use emergency credit if you don’t think you’ll be able to top-up your pre-payment meter. If you’re self-isolating, then E-ON will be able to send an engineer to your home and assist you.
If you’re on a pay-as-you-go service then it’s best to call the E-ON helpline – their website states that any credit received for bills will have to be paid back at a later date.
Npower customer they’ve stated on their website that they’ll look into various ways to help their customers pay, including payment arrangements, spreading bills over the course of the year via direct debit and allowing 30 days extra breathing space from payments.
EDF energy customer and struggling to pay your bill, then the latest advice is to call EDF energy’s helpline.
Bulb customer then you’ll be able to pay off your energy bills through repayment arrangements or longer payment periods if you’re struggling to pay right now.
Green Star customer on a meter system then you’ll be able to get £50 of credit at your nearest outlet for you, a friend or family member to collect. If you’re self-isolating then you may be able to have a pre-paid card or key delivered to you. If you’re not on a meter system then call the Green Star helpline.
SSE customer and worried about paying, the latest advice is to call the SSE helpline number to see how they can help your situation.
ScottishPower customer they’ve stated on their website that they’ll be taking measures to help people afford their energy, including longer to pay, reviewing monthly payments and the ScottishPower hardship fund.
If you are paying for your car on finance, you may find it’s an unnecessary expense right now, and you’re not getting your money’s worth. Here’s the steps the FCA have taken to help you:
In England, from the 31st March, schools can offer weekly vouchers of £15 per child which these can be spent at a wide range of supermarkets. These will be sent via email or a gift card in the post. In Northern Ireland from 30th March, each child will receive £27 per fortnight until 30th June or when schools reopen if this is sooner. The payments will be made into the parents’ bank account – if the details are incorrect these can be updated on the EANI website. In Scotland and Wales, meals will be issued as food (for collection or delivery) or by vouchers.