Martin Lewis: What you need to know about lockdown finances
People across the UK are once again in some form of lockdown, and while physical and mental health is the primary concern, tighter restrictions have also had major impacts on income and finances. MoneySavingExpert.com founder Martin Lewis explains what everyone needs to know about lockdown finances.
Speaking on The Martin Lewis Money Show on ITV last night (7 January 2020), Martin explained that this time round, support mechanisms for people who are financially affected by lockdown restrictions are already in place - and gave reminders of what's available.
You can find more info on all these topics in our Coronavirus Finance & Bills Help, Coronavirus Employees' Help and Coronavirus Self-Employed & Small Limited Company Help guides.
Furlough is available until 30 April - at your employer's discretion
This is where the state pays 80% of your wages up to £2,500/month. You need to have been on your employer's payroll by 30 October 2020, and it's available for zero-hours and agency workers too.
- Furlough is now flexible. As Martin explained: "Let's say you work 35 hours a week - you could work 10 hours a week and your employer has to pay your full salary for that, and you could be furloughed for the remaining 25 hours a week and get 80%. And that's very useful when not all the work has dropped out."
- You can be furloughed if you can't work due to childcare responsibilities. Martin said: "If your kids are now at home, firms can furlough you just because of that. Ask them - they don't have to, but I'd hope they would be considerate. If they won't furlough you, you do have a legal right to time off to look after your children, but you don't have a legal right to be paid for it."
- And your employer can furlough you if you're told to shield - if not, check sick pay. "If you've been told you have to shield - and millions of people are getting letters saying they shouldn't leave their homes - firms can furlough you for that reason," said Martin. "If not, you may be eligible for sick pay or statutory sick pay, though not everyone will be and there are gaps in the system."
Self-employed who've suffered profit reductions can get grants of up to £7,500
The third installment of the Self Employed Income Support Scheme (SEISS) is worth 80% of average profits up to a maximum of £7,500.
- You can apply until 29 January and the eligibility is the same as the previous grants. In short, you must have filed a tax return for 2018/19, have an average trading profit of less than £50,000/yr, and 50%+ of your income must be from self-employment. Though Martin warned: "Those who couldn't get the first grants are still not going to be able to get it. I hope there might be some wiggle room for the fourth grant but there isn't for this one."
- You need to make a declaration that you've a reasonable belief you'll have significant profit reductions due to coronavirus. This must be for the period between 1 November 2020 and 31 January 2020. Martin said: "When this was first launched, many people said 'But I'm not sure now' - so I said to wait. Well, we're getting near the end date and there's a lockdown, so I'm sure you now know if you're likely to have a significant drop in your profits, in which case make the application."
- Your reduction in profit has to be for one of two reasons. Martin said: "First, lower demand, activity or capacity - that could mean fewer customers, cancelled contracts or supply chain issues. Or you've been temporarily unable to trade - if lockdown's shut you down that's pretty clear-cut, or you've been told to shield or self-isolate (not because you're returning from holiday), or because you're caring for your kids."
Check universal credit or payment holidays
- Universal credit can be worth over £1,500/month. Martin says: "If you're struggling and you've not got help, this is the catch-all. Apply for it, don't dismiss it - many people who are eligible aren't applying because they think it's not for them, but check it out."
- Payment holidays are available until 31 March. Martin said: "If you are struggling due to covid, you're due up to six months automatically (though you apply for three months at a time).
"Only do this if needed as a payment holiday doesn't mean interest doesn't rack up, and while it won't go on your credit file you can't apply for a new remortgage while on a mortgage payment holiday. If you've already had the six months now, you have to apply to the lender for 'tailored support' though it will go on your credit file."
- Three-month £500 interest-free overdrafts at Lloyds, Bank of Scotland, Halifax and Santander end on 31 January. Martin said: "This is urgent. There is no longer any official overdraft help, but four of the main banks will currently give you a three-month £500 0% overdraft if you are struggling due to coronavirus. But they are stopping that provision on 31 January, so if you need it apply for it soon."
There's help for employees required to work from home
It's not just those out of work who may be entitled to help, if you're currently working:
- Benefits are available if you've got extra costs. Martin said: "If you've had extra costs on your electricity or your gas, you can either ask your employer for £6 a week to cover it - they don't have to do that, and many won't because they're struggling - or you can get tax relief on £6 a week. If your cost are higher than that, you'll need to prove it."
- For 2020/21, you can get the whole year's tax relief if you've been required to work from home for just one day. It's worth £62/year if you're a basic rate 20% taxpayer, and you'll receive it through a change to your tax code. Martin said: "Since I've been going on about it, 1.4 million people have done it and I've been swamped with 'Thanks, it only takes 2 minutes'-type tweets."
If you do self-assessment, you'll need to apply for it via your tax return. There's more information online.
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