Know Your Money Rights in Covid -19

Women UK get the low down on what our options are around money and business. Your money rights in covid 19?  Do you know your entitlements? You may be surprised……

New Bounce Back Loan Scheme for small businesses

The Chancellor announced a new loan scheme for smaller businesses that will benefit from a 100% government-backed guarantee. The initial details announced are:

  • Businesses can apply for loans between £2,000 and £50,000 but will be limited to loans not exceeding 25% of turnover.
  • If £50,000 isn’t enough the existing CBILS is suitable – see https://www.hixsons.co.uk/blog/save-your-business
  • Access to cash, following a successful application, should be made available within days. That’s right – DAYS!
  • Government will step in and repay the loan (100% guarantee) if the company is unable to meet its loan obligations.
  • Application will be a simple online form.
  • Loans will be interest free for the first twelve months and government will cover any other fees associated with the loan set-up.
  • No loan repayments will be required for the first year.
  • The scheme will launch for applications on Monday 4 May 2020.
  • The government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and will further agree a low standardised level of interest for the remaining period of the loan.

More details to come.

Personal Affairs Guide

The aim of this guide is to highlight the main areas which can make a difference and may remind you about something you have not yet done. Your money rights in covid 19 are..

Build up cash

Prepare a budget
Create a budget on a monthly or weekly basis showing the expected money coming in (from employment, savings etc) and what expenses are likely to be incurred.  This way you can understand the facts of the situation before deciding what needs addressing and how much of a gap there is to fill. If income has reduced then expenditure also needs to reduce.

Reduce costs where possible
The initial reaction is to reduce household expenditure. Some expenses such as travel and eating out will already have reduced given the lockdown. You can also stop spending on non-essential items for the time being and trying to save some cash for an emergency fund. Examples include:

  • Gym membership
  • TV sport packages (given there is no sport being played)
  • Travel season tickets can be part-refunded for the portion which is not being used
  • Prepaid nursery fees or exercise classes may not be refundable but is worth checking, even if it means the payments can be converted into credit for the future when they can be used

Build up cash
If holidays and other future commitments are no longer going ahead there may be refunds available or insurance claims to be made.
Most banks will now waive the redemption fee on cash held in a fixed term savings accounts which is another way to give a buffer in difficult times. Only dip into your savings if necessary.
Another option available to people with good credit history is to take out a 0% on purchases credit card which can give 0% interest on purchases made for 12, 18 or 24 months.  This is only a temporary measure and you need to be confident you can repay the amount at the end of the term as this is effectively taking on additional debt – albeit at 0% interest.

Tax

Universal Credit
Universal credit, the UK government social security payment, now covers most of the benefits available to individuals.  There is a detailed guide which can be provided covering all considerations of Universal Credit. The key points are:

  • A change to working hours / pay may mean that an individual can claim an increased Universal Credit payment
  • Self-employed and zero-hour contract workers can receive Universal Credit
  • The typical 5-week lag before receiving payments for Universal Credit can be shortened by an emergency Universal Credit loan which is then paid off by future Universal Credit payments

See: https://www.gov.uk/universal-credit

Job Seekers Allowance
If you have lost your job you may be eligible for ‘New Style Employment and Support Allowance’. This applies to people who have been employees (not self-employed) in the last 2 or 3 years. Your money rights in covid 19.
https://www.gov.uk/jobseekers-allowance/eligibility 

Child Benefit
With many people being furloughed, being made redundant or making lower profits their income for 2020/21 may well fall below the £50,000 limit at which child benefit starts being taxed.  The rate of Child benefit increased from 6 April to £21.05 a week for the eldest child and £13.95 for each additional child. Many couples with income over £60,000, when the benefit is fully taxed stopped claiming Child Benefit rather than having to repay it back in tax. They should therefore reinstate their claims if the income of the higher paid taxpayer drops back below £60,000.

Self-Assessment Deferral
The next deadline for self-assessment tax is 31 July 2020 for the second payment on account. This can now be deferred until 31 January 2021 which gives a cash boost for the next 6 months but remember this will need to be paid along with the tax due on the 2019/2020 profits in the tax return, also due by 31 January 2021.

Working from home allowance
If you now have to work from home, your employer are required to pay you  a working from home allowance.  This can either be a flat rate of £6 a week or can be calculated as the directly incurred increase in expenses.

House

Mortgage
Banks have been required to provide 3 months mortgage relief to borrowers.  People should contact their lender directly and in many cases this can be done online. Do not cancel the direct debit to the bank as this will be classed as a missed payment and recorded on your credit file.  Eligibility criteria are that mortgage payments are up to date and the individual has been impacted by Covid-19 (self-certified). Interest will still accrue on the mortgage for the 3-month period but no cash payments are needed to be made.

Other options which may be relevant include switching to an interest only mortgage and extending the term of the mortgage.

Rent
The government has brought forward protections for private and social renters such that landlords will have to give renters 3 months’ notice if they intend to seek possession (i.e. serve notice that they want to end the tenancy). This legislation is in force until 30 September 2020 but may be extended. Your money rights in covid 19.

If a renter is having difficulty paying their rent then they should communicate with their landlord and reach an agreement.  The landlord can apply for the 3-month mortgage relief mentioned above which would be expected to be passed on to the renter.

https://www.gov.uk/government/publications/covid-19-and-renting-guidance-for-landlords-tenants-and-local-authorities

Utility Costs
If not already done so, this may be a good opportunity to shop around for new gas, electricity, water and broadband providers to save money.  But if a physical installation is needed to take place then it will not be possible to do so until after lockdown is lifted.

Helpful guide on household costs here: https://www.moneysavingexpert.com/news/2020/03/uk-coronavirus-help-and-your-rights/

Council Tax
Many councils have been accommodating to individuals struggling to pay their council tax.  There is no country wide standard for this so it is a case of reviewing the local council’s website and approaching them directly to see what help they can provide.

Finances

Credit Cards / Personal Loans / Overdrafts
The FCA has recently brought in a series of measures to support people who have personal finance. The summary terms are:

  • Offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by coronavirus
  • Allow customers who are negatively impacted by coronavirus and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months
  • Make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force
  • Ensure that customers that are using any of these temporary payment freeze measures will not have their credit score affected

https://www.fca.org.uk/news/press-releases/fca-confirms-temporary-financial-relief-customers-impacted-coronavirus

If you have a permanent / large balance on a credit card, they have two main options available:

  1. If possible, do a 0% balance transfer to another credit card: or
  2. Speak to the credit card company, explain that you have been impacted by Covid-19 and try to reach an arrangement

Car Finance / Pay Day Lenders
The FCA has also brought in measures to protect consumers who have the following financial products:

  • Motor finance – Firms are required to provide a 3-month payment freeze to customers who are having temporary difficulties meeting finance or leasing payments due to coronavirus. Firms are also expected to act fairly if the lease has come to an end and the individual cannot make the balloon payment.
  • High-cost short-term credit (including payday loans) – Firms are required to provide a 1-month payment freeze to customers facing temporary payment difficulties due to the coronavirus pandemic. No additional interest should be charged to the customer as a result of the payment freeze.
  • Other credit products – Firms that provide Rent-to-own, Buy-now-pay-later, or pawnbroking agreements to provide a 3-month payment freeze to customers facing payment difficulties due to coronavirus. Pawnbrokers should agree not to sell an item for the 3-month period.

https://www.fca.org.uk/news/press-releases/fca-confirms-support-motor-finance-and-high-cost-credit-customers

Self Employed Grant Scheme
The government scheme to support the self-employed protect individuals if they have suffered a loss in income. In this instance, a taxable grant will be paid to the self-employed or partnerships, worth 80% of profits up to a cap of £2,500 per month. We have a tool to show whether a claim is likely to be worthwhile and which will show how much you might receive. This is useful if you need to speak to your bank about an overdraft.

Other

MOT Deferral
The MOT expiry date will be extended by 6 months if it is due on or after 30 March 2020. The vehicle must be kept safe to drive.

Vehicle SORN
Vehicles that are not on the road don’t need to be insured. If a vehicle is no longer needed an individual can apply for a Statutory Off Road Notification (SORN) to officially declare it ‘off road’ indefinitely (assuming it can be parked on private property). Once it is certified, the insurance and road tax no longer need to be paid and any refunds can be reclaimed. Your money rights in covid 19

For more information, contact Nick on nick@hixsons.co.uk 01202 520010 www.hixsons.co.uk,

Read more about our spending habits here  from Women UK

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