This is Money: How to survive the nightmare before Christmas

The associated feature
This Is Money: How to survive the nightmare before Christmas

03/11/2020
by Money Mail reporters for The Daily Mail

 

England plunges into lockdown again tomorrow as the battle against coronavirus rages on.

Pubs, restaurants and most shops will shut for at least a month as we fight to control the virus in time for Christmas.

The first lockdown in March caused unprecedented disruption, with incomes vanishing overnight, banks shutting up shop and millions of us forced to delay mortgage and loan repayments.

Families were left thousands of pounds out of pocket after holidays and weddings were cancelled, with many people still fighting for refunds months on.

Today, we walk you through the financial support available for your family and business in this new lockdown. From furlough cash and payment holidays to tax perks and investment tips, there is help out there this winter.

Furlough scheme gets a reprieve

Billions of pounds in support for struggling households has been paid out since the first lockdown, protecting more than nine million jobs.

The furlough scheme had been due to end on October 31 but has now been extended for a month.

It means staff who cannot work will have 80 per cent of their wages (up to £2,500 a month) paid by the Government. Employers will have to pay their furloughed staff’s National Insurance and pension contributions – roughly 5 per cent of their wages.

The extension is available to any UK worker on their employer’s payroll before October 30. The less generous Job Support Scheme due to start this month has been postponed until after lockdown.

Note: If you’re furloughed, you can still work somewhere else if your contract allows.

More help for self-employed… but not all

Chancellor Rishi Sunak this week announced more help for self-employed workers.

The Self-Employment Income Support Scheme will now allow workers to claim 80 per cent of their earnings this month, and then 40 per cent in December and January.

The claim window will open at the end of the month, and the maximum grant over three months is £5,160. Grants will also be available for February to April.

To claim, you have to earn more than 50 per cent of your income from self-employment and make less than £50,000 a year.

Note: The self-employed can also still claim universal credit, which pays up to £409.89 a month for a single claimant.

Unfortunately, those locked out of help due to previously having had trading profits of more than £50,000, or who emply themselves through a limited company, are recently self-employed or freelancers, are still excluded.

I’m living on my overdraft and don’t know how I’ll clear debts

Single mother Bethan Jones says she will be left with unwanted debt because she can’t extend her payment holidays beyond six months.

The 31-year-old finance manager deferred payments on her car and mortgage after taking eight weeks of unpaid maternity leave due to a lack of childcare.

She wanted to extend the breaks further, but was told she can only defer payments for six months without it affecting her credit score.

Bethan, from Tamworth, Staffordshire, returned to work on October 12, but won’t get a full month’s wage until November 30.

In December she is expected to resume her mortgage payments and has one month left on her car finance holiday, worth £399 per month.

Bethan, whose son, Chase Fletcher, turns one next month, says a further deferral would allow her to pay off her credit card and overdraft.

She says: ‘I’m living on them. Now I will just be able to cover my bills and my debt will keep accruing. I don’t want to take any of the additional support if it will affect my credit.’

Payment holidays are back on

Borrowers who have not yet taken a six-month payment holiday will still be able to under new measures announced last week.

The rules apply to mortgages, personal loans, credit cards, motor finance, rent to own, buy-now pay-later, pawnbroking and high-cost short-term credit.

However, the maximum payment holiday remains six months: those who’ve already reached that limit cannot extend it without it being recorded on their credit file.

Borrowers have until January 31 to request a payment deferral, but the Financial Conduct Authority (FCA) is asking customers not to contact their lenders yet. It says further updates, including from lenders, are imminent.

Those who’ve already taken a six-month holiday but are worried about resuming payments are advised to speak to their lender to arrange alternatives.

This could include switching to interest-only payments or extending the loan, but any further forbearance will affect credit files.

Those opting for new deferrals within the six-month limit should note that it could still impact on your ability to borrow — even if it isn’t recorded on your credit file.

The FCA says that those who can afford to resume full repayments should do so. It is also proposing that no one should have their home repossessed without their agreement until after January 31.

Extension: Payment holiday rules apply to mortgages, personal loans, credit cards, motor finance, rent to own, buy-now pay-later, pawnbroking and high-cost short-term credit

Banks also handed out more than 27 million £500 interest-free overdrafts during the crisis but will no longer be required to do so. Banks can now charge overdraft rates of up to 40 per cent or more.

Peter Tutton, head of policy at debt charity StepChange, is urging the FCA to provide additional support for those who have already taken a six-month holiday.

‘The priority must now be to ensure people facing payment problems because of the pandemic are not plunged into longer term debt or financial exclusion,’ he says.

Note: Payment holidays mean that interest will accrue. For example, someone on a 3.5 per cent mortgage with five years to run who was paying £1,000 would pay £121 extra per month after a six-month break.

Banks cut back opening hours

Most bank branches either closed or reduced their hours when lockdown restrictions were introduced, with some High Street names open just four hours a day.

Before social-distancing restrictions were eased, banks were only offering ‘essential services’ to customers; those who wished to pay bills or check balances were advised to do so online.

Santander branches will now open only between 10am and 2pm, Monday to Friday. Those with appointments booked will be offered assistance online or by phone.

The majority of the 672 NatWest and RBS branches will be open between 10am and 3pm from tomorrow. Lloyds Banking Group, which includes Lloyds, Halifax and Bank of Scotland, says it is still reviewing Government guidelines.

Barclays is not making any changes to its 904 branches following new lockdown rules but will continue to review demand.

Some 322 HSBC branches are open between 10am and 4pm, while 263 are open between 10am and 2pm. HSBC expects to operate the same hours going forward.

During the first lockdown, Nationwide closed 10 per cent of its branch network. Now, 98 per cent of branches are open and will remain so.

Furlough is a lifeline but I fear it will prolong the inevitable

Jayd Linney runs two promotions companies that provide staff to hospitality businesses

Business owner Jayd Linney says her staff were saved from the chop by the late extension to furlough.

Jayd, who runs two promotions companies that provide staff to hospitality businesses, says she was preparing to finalise redundancies this week.

She will now be able to keep her four full-time staff after the furlough scheme was extended on Saturday — for now at least.

Jayd, who lives in Glasgow, says her businesses have been frozen since March due to the effects of the pandemic on hospitality.

But Government grants have only been available to firms that pay business rates, which Jayd does not because she does not have premises.

She was preparing to let her staff go on Monday after furlough was wound down last week.

The 31-year-old says it was a relief when the scheme was extended until December, but admits there is no guarantee they will still have jobs by Christmas.

‘It’s a massive lifeline and hopefully it will secure jobs, but it might just prolong the inevitable,’ she says. ‘It depends what happens in December.

‘You’re about to make all your staff redundant and then 48 hours before you do, they come and save the day. You can’t even plan for two weeks’ time.’

You can still move home

Unlike the spring lockdown, this time the Government has not imposed a freeze on the housing market.

Home moves can still go ahead as removal companies, tradespeople and construction workers have been given the green light to keep working.

But experts are warning of further delays to deals as conveyancers and surveyors grapple with tighter restrictions.

This will be compounded by the rush of buyers looking to complete before the stamp duty holiday ends on March 31 — and is likely to fuel demands for the deadline to be extended.

Thousands of moves could collapse as buyers realise they can’t afford to complete without the savings.

Last week, a joint letter from major bodies across the industry urged the Chancellor to extend the holiday by at least six months to avoid ‘a cliff edge’.

Buyers could also see mortgage offers pulled if their financial circumstances change over the next few weeks.

Anyone concerned should speak to their broker or lender.

Guidance on tenant evictions has not changed in light of the new lockdown.

Private landlords must give six months’ notice if they want to evict you. Renters in England and Wales cannot be evicted between December 11 and January 11 as part of a ‘winter truce’.

Weddings ‘off’ again

Weddings and civil partnerships will not be able to go ahead unless there are ‘exceptional circumstances’ — though these have yet to be outlined.

If you are due to get married in the next four weeks, speak to the venue and any suppliers you have to see if you can move the date.

If the venue cancels, then you should get your money back, although many couples struggled to get refunds earlier this year.

Since then, the Competitions and Markets Authority (CMA) watchdog has said that where lockdown laws prevent a wedding from going ahead, couples should be offered a full refund. This would include non- refundable deposits.

However, it will allow businesses to withhold money to cover what they have already spent on the wedding.

How to invest for lockdown… play a long game

Back in March, more than £150 billion was wiped off the global stock markets. Experts told savers to grin and bear it — reminding them that investing was a long-term game.

And between the first day of lockdown on March 23 to June 8, the FTSE 100 rose by 30 per cent. Yet since the end of the first lockdown on June 15, the index has fallen 8 per cent.

Experts advise against panicking. Russ Mould, investment director at broker AJ Bell, says: ‘A good Northern saying is, ‘If in doubt, do nowt’ and uncomfortable as it may feel, being patient may well turn out to be the right thing to do.’

However, investors often turn to gold in times of crisis as the precious metal holds its value.

The Pure Gold Company says it saw an 813 per cent increase in inquiries over the weekend, and purchases of bars and coins had soared 923 per cent over the past two weeks.

Make sure you claim help on offer

A million households missed out on an average of £1,700 last year after failing to claim income-related benefits. Just six out of 10 people entitled to pension credit claimed it in the year 2018-19, according to the Department for Work & Pensions.

Pension credit is split into two parts. The ‘guarantee credit’ tops up your weekly income to £173.75 if you’re single or £265.20 if you’re a couple.

The ‘savings credit’ pays £13.97 a week, or £15.62 to a couple. This is available to those with savings or an income higher than the basic state pension, but only if you reached state pension age before April 6, 2016.

The benefits also entitle you to other perks. If you are over 75, you can get a free TV licence if you claim pension credit.

You could also get free NHS dental treatment and £140 off your electricity bill under the warm home discount scheme. Check with your supplier to find out if it participates in the initiative.

If you were born on or before October 5, 1954, you could get between £100 and £300 to help pay your heating bills. This is known as a ‘winter fuel payment’.

If you have children under 16 (or 20 if they stay in full-time education) you can get £21.05 a week for the eldest, and £13.95 for additional children.

If you or your partner earns more than £50,000 a year, you can still claim but may be taxed on the benefit.

Easing bills burden

Energy regulator Ofgem is bringing in new rules from December 15 to help those struggling to pay their bills.

Suppliers must offer emergency credit to customers who cannot top up prepayment meters. Firms must not disconnect customers who can’t pay.

 

Source: This Is Money

This Is Money: How to survive the nightmare before Christmas
< Back to Press