Managing your money during a pandemic – A helpful guide
This article is updated regularly as and when information becomes available. We will endeavour to ensure that it is both accurate and up to date so as to provide you with the help you need at a time when you need it most. As you can appreciate, these are unprecedented times with information coming in thick and fast from multiple sources, changing by the hour and so as hard as we might try, we can't promise perfection.
Our money guide to help you through a pandemic
We have also summarised key information relating to important areas of your finances, split into five main categories which include:
- Savings & Investments
We have also provided a help section with guidance on budgeting, cutting costs and where to find additional help if you are struggling with debt.
- Self-Employed Income Support Scheme, with those eligible receiving a cash grant worth 80% of their average monthly trading profit over the last three years (up to a maximum of £2,500 per month, paid for at least 3 months). Further details are available on the Government website (26/03/20)
- Coronavirus Job Retention Scheme. Any employer in the country – small or large, charitable or non-profit - will be eligible for the scheme. It will provide government grants to cover 80% of the salary of retained workers up to a total of £2,500 a month. Can be backdated to 1st March 2020 (20/03/20)
- Increase to the Universal Credit standard allowance, for the next 12 months, by £1,000 a year (20/03/20)
- Nearly £7bn of extra support being provided to the welfare system in order to strengthen the safety net and protect people’s incomes (20/03/20)
- Suspension of the minimum income floor for everyone affected by the economic impacts of coronavirus. Every self-employed person will now have access, in full, to Universal Credit at a rate equivalent to Statutory Sick Pay for employees (20/03/20)
- VAT payments have been deferred for the next quarter (20/03/20)
- The next self-assessment payments will be deferred until January 2021 (20/03/20)
- Almost £1bn of support being provided for renters by increasing housing benefit and Universal Credit. This should mean that Local Housing Allowance will cover at least 30% of market rents in most areas (20/03/20)
- Undisclosed measures to 'support people's financial security' (17/03/20)
- £330 billion government-backed loans made available to help businesses (17/03/20)
- Working with lenders to offer 3 month mortgage holiday's for those affected (17/03/20)
- Cash grants of up to £25,000 for smaller businesses in retail and leisure sectors (17/03/20)
- Grants for small businesses increased from £3,000 to £10,000 (updated 17/03/20)
- Business rates abolished (for 12 months at least) for all businesses, irrespective of rateable value (updated 17/03/20)
- Increased resources to NHS, with no limit, for combating Covid-19 (11/03/20)
- £5bn emergency response fund (11/03/20)
- Statutory sick pay from day 1 for all workers told to self-isolate even if showing no symptoms of Covid-19 (11/03/20)
- Minimum income level for Universal Credit removed (11/03/20)
- Businesses with fewer than 250 employees will get sick pay refunded for up to 14 days (11/03/20)
- Loans for small businesses to assist drop off in production & costs incurred through Covid- 19 (11/03/20)
- Business Rates abolished for small businesses in the leisure industry and some associated industries (below £51,000 rateable value) - (11/03/20 - subsequently updated)
- £3,000 grants to small business who do not pay business rates (11/03/20 - subsequently updated)
- Total of £30bn fiscal stimulus (11/03/20)
- New loans available to help small businesses (11/03/20)
Banks - What have they said?
Lloyds has said that 'If your income has been affected by the disruption from the coronavirus, we have options to help you'.
- No fees for missed payments on credit cards, loans and mortgages.
- Payment holidays on mortgages and loans with additional support provided when you need it.
- Emergency access to savings in fixed-term accounts without charge.
- Deposit limits of up to £500 for mobile banking, so you'll be able to scan and pay in cheques.
Barclays has not yet offered a formal stance in regards to the current situation, however it directs customers to its 'Managing Money Problems' page. Barclays says that 'If you haven’t missed a payment yet but are worried you’re about to, we’re here to help...'
Barclays has provided the following numbers that can be contacted if you feel you may struggle to make a payment.
- Barclaycard – 0800 046 8324. Lines are open every day from 9am to 9pm
- Barclayloan and Overdrafts – 0345 600 4545. Lines are open Monday to Sunday from 8am to 9pm
- Mortgages – 0800 022 4022. Lines are open Monday to Friday from 8.30am to 5.30pm, and Saturday from 9am to 1pm
- Premier – 0800 9247 365. Lines are open 24 hours a day, 7 days a week.
HSBC has said 'To help you through these uncertain times, we're working hard to make sure you have the advice and support you need'
- Short-term support through reduced or deferred payments for mortgages
- Longer-term support through extending the remaining term of your mortgage, switching rates or switching part or all to interest-only mortgage arrangements
- Giving you early access to fixed-rate savings accounts without closure charges
- Support for anyone with unsecured debt through reduced payments or breathing space to defer payments due. These solutions are tailored to individual needs
- The option of a temporary increase in credit card and overdraft limits
If you need any further assistance you can contact them on 03457 404 40411
HSBC has also announced that it has allocated £5 billion to help businesses in need of support. You can contact their helpline on 08000 121 614, from 09:00 – 17:00 Monday to Friday.
Natwest has said 'We have put a range of measures in place to help support you if you're experiencing financial difficulties...'
- Payment holidays on Mortgages, and Loan deferral for up to three months
- Early closure of fixed savings accounts to access cash with no early closure charge
- Refunds on request for credit card cash advance fees, where you've needed to access cash in an emergency
- You can apply for an increased credit card limit
- You can request an increase in your Debit Card cash withdrawal limit of up to £500
RBS has not set out any specific plans on how it will help its customers. It has stated 'Where you have had a direct financial impact caused by the coronavirus, we may be able to support you, so please get in touch'.
They may be able to help you have suffered:
- A delay in income
- A reduction in income/increase expenditure
- An unexpected loss of income
- A serious change in circumstance
Halifax has said '...you may have concerns about how it could affect you and your money. Your peace of mind is still our top priority. So, we’ve put in place some additional support and information to help'.
- No fees for missed payments on credit cards, loans and mortgages
- Payment holidays on mortgages and loans with additional support provided when you need it
- Emergency access to savings in fixed-term accounts without charge.
- Deposit limits of up to £500 for mobile banking, so you’ll be able to scan and pay in cheques
First Direct has said that they 'know you may have concerns about the knock on effect on your money and wellbeing. We've put together some additional support and information to help you'.
- Giving early access to fixed-rate savings accounts without closure charges
- Support with unsecured debt by offering breathing space, tailored to individual customer need
- The option to apply for an increase in credit card and overdraft limits
- The opportunity to apply to extend the remaining term of your mortgage or switch your rate
If you need any further help, you can ring them on 03456 100 100.
Santander has provided 9 tips on its website in order to help its customers. Tip 1 focuses on the help that is available and they have stated the following:
- Mortgage payment holiday: If you have a mortgage with us, we can offer payment holidays for up to 3 months. The best way to apply for this is online, take a look at our FAQs to check if you are eligible and for further support on mortgages.
- Extra borrowing: We may be able to increase your overdraft or credit card limit, especially if you hold your main bank account with us.
- Access to savings: We can help you access your money held in Santander fixed-rate bonds and fixed-rate ISAs before the end of the fixed term, free of charge.
There is a telephone number for those that need urgent help, here are the details:
Santander urgent financial help helpline - 0800 01 56 382. Santander request that you are only to use this number if you need emergency support. This allows those who really need to receive it. Lines are open Monday-Friday 9am-5pm and Saturday 9am-4pm.
Help with Income - Employed
Sick pay through your employer
What is it?
Most employers will have a sick pay policy and so you should speak to your human resources department to find out what sick pay you will be entitled to. Some bigger employers may offer generous sick pay packages however smaller employers are unlikely to offer the same level of sick pay and so it is unlikely you'll get paid for more than a couple of weeks if off sick or told to self-isolate. Businesses are under huge financial pressure and so you may have to look at alternative solutions such as statutory sick pay, explained in the next section.
Some employers only offer paid sick leave to those that have passed their probation or those that have served at least a year or two in the role. Every employer will have a different policy and so you will need to speak to your employer to see where you stand.
This will vary from employer to employer and may depend on your previous sickness record, attendance level, performance, employee status and time in the role. Speak to your employer to find out.
Statutory Sick Pay (SSP)
What is it?
Whether you have been told to self-isolate as a precaution or because you are actually sick, you may qualify for Statutory Sick Pay (SSP). The government is making plans to ensure that you can claim from the first day of sickness, rather than having to mandatory 3 day waiting period before it kicks in. The legislation should be finalised soon and once it is, claims will be backdated to 13th March. It is payable up to a maximum of 28 weeks.
In order to be eligible, you need to be in employment and earn at least £118 per week
Statutory sick pay currently pays just £94.25 per week rising to £95.85 from 6th April 2020
Coronavirus Job Retention Scheme
Your employer will be entitled to apply for a government grant to cover up to 80% of your salary (up to a total of £2,500 per month). This payment can be backdated to 1st March 2020. The scheme should be up and running by the end of April 2020.
It is worth seeing if you qualify for any other benefits. Use the government's benefits calculator to check whether you are entitled to additional benefits such as Child benefit, housing benefit, income support or universal credit.
If you are made to work from home, you may be eligible for tax relief, The Express has written a helpful article that explains what relief is available and who can benefit.
Some credit card providers will allow emergency credit increases. Speak to your provider to see if they can help.
Help with Income - Self-employed or Freelance
Self-Employed Income Support Scheme
Self-Employed Income Support Scheme is available for those that are self-employed and with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
To qualify, more than half of your income (from the qualifying period mentioned above) must come from self-employment. Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.
Up to 80% of your average monthly trading profit (over the last three years) up to a maximum of £2,500 per month, will be paid as a grant (for at least 3 months).
Employment Support Allowance
What is it?
Employment Support Allowance (ESA) is a benefit that you may be able to claim if you are employed, self employed or even unemployed.
You'll need to be under state pension age and have an illness or disability that affects how much you can work. Employment support allowance cannot be claimed if you are currently claiming the following:
- Statutory Sick Pay
- Statutory Maternity Pay
- Jobseeker’s Allowance
You'll need to have been employed or self employed and have paid enough qualifying national insurance contributions in the previous 2 to 3 years.
The initial payment is £57.90 a week if you are under 25 or £73.10 a week if you are over 25. These payments could rise to £111.65 a week after 13 weeks depending on your personal circumstances
The government has announced a suspension of the minimum income floor for everyone affected by the economic impacts of coronavirus. This means that every self-employed person will now have access, in full, to Universal Credit at a rate equivalent to Statutory Sick Pay for employees. Check the government page on Universal credit for more information.
Small businesses are set to struggle in the coming months and so what help is available to ensure small businesses survive?
Coronavirus Job Retention Scheme
Every employer, large or small will be entitled to apply for a government grant to cover up to 80% of employee salaries (up to a total of £2,500 per month per individual). Employers are being encouraged to top this up where possible. This payment can be backdated to 1st March 2020. The scheme should be up and running by the end of April 2020.
Cash grants of up to £10,000 are being made available for up to 700,000 of the smallest businesses. The exact criteria and how businesses can apply is currently unknown, however we will update this article as and when more information is available.
Cash grants of up to £25,000 are being made available for slightly larger businesses (with a rateable value of less than £51,000)
Interest-free business interruption loans (up to £5 million) will be offered with no interest payable for the first 12 months.
Help with Savings & Investments
With the recent interest rate cut announced by the Bank of England, savings rates are set to tumble. In addition, the volatility in the stock market has unsettled even the most seasoned investors leaving many people wondering what to do for the best.
Savings rates will continue to be poor while interest rates remain low. Better rates can be found if you are willing to lock money away, however, with the uncertainty that exists as a result of the Coronavirus outbreak, it should be done with caution. Check out our savings 'best buy' tables for the best savings rates available right now.
Those that have money locked away may be able to access the money without any penalties or fees thanks to new rules being implemented by banks and building societies in response to the current financial climate. It is worth speaking to your provider to see what help might be available.
Those with investments will have seen their portfolios fall in recent weeks and will no doubt be wondering what to do for the best. In truth, it is impossible to know, however you may wish to check out our weekly YouTube show Midweek Markets, where we explain what has been happening in investment markets and what to look out for in the weeks ahead.
Damien, founder of Moneytothemasses also runs his own £50,000 portfolio live, via his 80-20 investor service, a service that provides industry-leading research, tools, alerts and regular newsletters designed to maximise returns and bolster confidence when it comes to DIY investing.
Help with Debt
Three month mortgage payment holiday
The chancellor of the exchequer, Rishi Sunak announced that there is to be a three month mortgage holiday offered to homeowners who are struggling to make repayments due to the effects of coronavirus. Landlords who benefit from this are being urged to help out their tenants.
How to apply for a three month mortgage holiday
Contact your lender and explain your situation and they should be able to help. Try wherever possible to do this before missing a payment as missing a payment could impact your credit rating.
Will applying for a mortgage payment holiday impact my credit rating?
It is currently not clear whether applying for a mortgage payment holiday will impact your credit score. However, bear in mind that mortgage payment holidays existed before the current financial crisis and in most cases, doing so didn't affect your credit score (as they were authorised payment holidays and so were noted as such).
Most credit card providers have announced that they are relaxing their credit card rules with no fees for missed payments. There is talk of repayment holidays being extended to personal loans and credit cards so you should speak to your provider to see what they can offer you. It is especially important to speak to your provider before you miss a payment because doing so could harm your credit score.
Like credit cards, most personal loan providers will be relaxing their rules, again ensuring no fees are charged for missed payments. Repayment holidays of up to three months may also be offered so speak to your provider at the earliest opportunity to see what they can do for you. Make sure that you speak to your provider before you miss a payment so that your credit score isn't impacted.
Help with Bills
Below we have provided some advice if you are struggling to pay your bills
There are many options available to those that are struggling to pay their council tax and we explain these in detail in our article 'What to do if you are struggling to pay your council tax'. It is important to speak to your council at the earliest opportunity so that you can discuss the options that are available to you.
If you are a domestic customer (non-business) then water companies are not allowed (by law) to disconnect or restrict your water supply if you owe them money. You should be able to speak to them if you are experiencing financial hardship and come up with a workable solution. Payment plans can be set up with your supplier, often for as low as a few pounds per month, easing the financial strain and ensuring your credit report isn't impacted. Make sure you speak to your supplier first before missing any payments. Check out the advice offered by Citizens advice.
Electricity & Gas
Unlike your water supply (which is protected) it is not illegal to cut off your gas or electricity supply for non-payment, so if you are struggling to pay your energy bills you should speak to your supplier at the earliest opportunity and explain your situation.
However, if you are on the Priority Services Register, then the supplier will be prohibited from disconnected your supply.
To apply to be on the Priority Services Register, you must:
- be of pensionable age
- be disabled or chronically sick
- have a long-term medical condition
- have a hearing or visual impairment or additional communication needs
- be in a vulnerable situation
To be added to the Priority Services Register then speak to your supplier. Remember, these are unprecedented times and so if you are struggling to pay your energy bill you are likely to get a sympathetic response when you speak to your supplier. Most suppliers will offer a solution such as an agreed payment plan. Check out Ofgem, provided some excellent advice if you are struggling to pay your energy bill. Alternatively, Ofgem has a page dedicated to Coronavirus with lots of helpful information.
If you have a contract phone, check and see how long is left of your current contract and consider switching to a 'sim only' contract if you can. You are likely to make a large saving just from making a quick phone call. Alternatively, check out our article 'How to switch mobile provider with a text message'
You may also want to consider in this current climate whether you need a contract that has a large amount of minutes and data. If you find yourself having to self-isolate for long periods then you could simply use your home broadband instead and save the money on your phone bill. Remember though that if your broadband provider experiences problems with its service, you will have no backup.
As with all of your household bills, you should check and see if you can make a saving by switching provider. Check your current contract first and make sure you call your existing provider and see if they have any deals that can encourage you to stay with them. Remember though that a good broadband connection is important at a time where you may have to work from home and distance yourselves from relatives and friends. Don't settle for a poorer service or slower connection, just to save a couple of pounds if it is something you will need to rely on.
While it wouldn't be wise to cancel your Netflix subscription in the coming weeks, it may be worth looking through your subscriptions to see if you can cut back and cancel the ones you rarely use. Sky Sports have announced that customers can pause their subscription without incurring a penalty, however this cannot be completed online and so you will need to call their customer services team on 0800 151 2747. Expect lines to be busy. Which? have provided a useful article, sharing 10 tips to cut costs on shopping, regular payments and household bills
Transport secretary Grant Shapps confirmed that those who have an MOT due from Monday 30th March onwards will be granted a 6-month extension. If, for example your MOT is due on 13th April, your MOT would not expire until 13th October. You will be expected to keep your car in a roadworthy condition and garages should remain open for emergency repairs.
A new emergency coronavirus legislation was announced by housing secretary Robert Jenrick on the 20th March which means that private tenants will not be evicted from their homes for at least three months, even if they are struggling with their rent. You can read more about the announcement in an article written by the Guardian.
Chancellor of the Exchequer, Rishi Sunak announced new measures on the 20th March 2020 that provides increased support for renters, through an extra £1bn being made available through housing benefit and Universal Credit.
Now that schools have been closed there are plans to help parents who relied on free school meals. Details are currently being worked out but it is understood that it will be in the form of coupons or vouchers.
Food banks are a lifeline for lots of families but will obviously be very busy over the coming months. You can find out where your local food bank is by clicking here.
Also, check out our tips on saving money on food
Help with Insurance
Insurance is a tricky subject at this time and with so many policies and so many providers it can be difficult to understand how your insurance might be affected by Coronavirus. One thing to be clear on however, if you have a longstanding policy, taken out long before the pandemic arose then you have no need to worry, the terms and conditions should be unaffected by the virus and the policy should pay out for what it was intended to cover (so long as you haven't breached those conditions by going against government advice). Any new policy you may take out could possibly have a special clause and so it is important to read the documents and speak to the policy provider before taking out the insurance.
Cancelling insurance policies may seem like a logical step in terms of cutting down on your monthly spending, but it can be disastrous if you ever need to fall back on that policy in the future. Insurers are likely to change their policy terms and conditions in response to the virus and so older policies are much more likely to cover you and so you should think twice before cancelling.
This is perhaps one of the trickiest areas of insurance to advise on as the situation is constantly changing, by the hour in some cases. Speak to your insurer to see where you stand and check out this excellent guide by MoneySavingExpert.
Life insurance / Critical Illness / Income Protection
Life insurance policies taken out prior to the rise of COVID-19 will be unaffected by and will pay out in full should a claim arise from contracting the virus. In terms of how new life insurance policies will be impacted, specialist Life Insurance broker LifeSearch has stated 'Insurers are changing their stances regularly at the moment, and it's very likely that a lot of them will not cover for this going forward - so whatever you do, keep yours in place!'
No critical illness policy has Coronavirus listed as a defined illness. That said, 'Respiratory Failure' is listed as a defined critical illness on most policies and so you may be able to make a claim, however, the definition is severity based and so a successful claim is unlikely.
Life Insurance and Critical illness insurer Zurich has said 'Coronavirus is not a specified ‘Critical Illness’ on Zurich’s policy. The vast majority of people who contract the illness go on to make a full recovery. In a small number of cases, people do die as a result, and in such circumstances, the life insurance attached to our plans would pay out. Under our “Respiratory Failure – Of Specified Severity” definition, it is possible a claim might be presented but the opinion of our Claims and Medical Officer is that the coronavirus is unlikely to produce the permanent symptoms or impairment to lung function required to meet this definition. We will consider any such claims presented on the basis of the individual circumstances'.
Most Income Protection policies have a minimum 'deferred period' (the period that you have to be off of work before you can make a claim) of 4 weeks. Given that the recommended isolation period for coronavirus is around 2 weeks, it is unlikely that any claims will be accepted solely on this basis. That said, where symptoms are severe or there are additional complications or underlying medical conditions that result in you being ill for longer than your specified deferred period, then the normal claims and assessment process will apply.
Will my private health insurance cover treatment for Coronavirus?
There has been talk in the media that private health insurance providers may be asked to step in and help with the crisis and so it is unclear how your policy may be affected. The situation is changing on a daily basis and so you should speak to your insurance provider to see exactly how your cover may be impacted and whether you would receive private treatment in the event that you were to get COVID-19.
AXA PPP healthcare has said 'Coronavirus is a significant national crisis and we all need to work together to come through it. We have seen some speculation in the media regarding the NHS and private hospitals working together but we will need to understand the plans in full before we can advise on what this may or may not mean for our customers'.
In addition, it is likely that some private health insurance providers will apply suspensions to some products and/or product add-ons. The Financial Conduct Authority (FCA) has recently released a statement which sets out their expectations of insurance providers.
Can you use your private health insurance to get tested for Coronavirus?
When you take out a private health insurance policy you have the option to take out 'diagnostic testing' as part of the cover. Unfortunately, this option does not currently cover diagnostic testing for COVID-19 and is currently only available at Public Health England (PHE) designated laboratories.
Help with budgeting and cutting costs
If you are having to survive on a lower income and struggling to pay your bills then you should consider using a budgeting app. By syncing all of your bank accounts, credit cards, loans and investments, a budgeting app will be able to categorise your spending, make it easier to see what bills are coming out and help to spot wasteful subscriptions. Best of all, many of them are free. I've done this myself and have saved hundreds of pounds and now have a really good understanding of exactly where my money goes each month. Check out our article 'The best budgeting apps in the UK - How to budget without trying'.
If you have a season ticket and are having to work from home then you could cancel your season ticket for a small admin fee (around £10) and receive a partial refund. Remember however, that when you need to return to work you may need to buy a new season ticket and it will be based on the price at the time and of course, prices could rise. Speak to your travel provider to find out what options are available.
If you feel that you will have a problem meeting any of your bills, now or in the next few months, contact the company concerned to discuss your personal situation. Most companies are ready for your call and will do what they can to help you through these difficult times. Don't worry about your situation, you are not alone and help is available if you reach out.
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