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BLOG: Making sense of the finances

Yesterday (26/3/2020) the Chancellor, Rishi Sunak MP, announced a range of measures to help support self-employed workers affected by the spread of COVID-19.


Rishi Sunak, MP, Chancellor of the Exchequer

This means that if you have suffered a loss in income because of the coronavirus, you may be eligible to receive a taxable grant, worth 80% of your monthly average profits over the last three years, up to a maximum of £2,500 per month. Initially, this will be available for three months in one lump-sum payment, and will start to be paid from the beginning of June.

HMRC will use existing information to identify those eligible and will contact you to ask you to apply. They will look at the information you have submitted in your tax returns and have said that if you have not yet submitted your Income Tax Self-Assessment tax return for the tax year 2018-19 (which was due at the end of January), you still have chance to do this to be considered – but you must do this by 23 April 2020. The scheme will only be available to sole traders, and not those who pay themselves through a registered company.

While this is good news for many childminders who have had their incomes reduced by either having to close their setting, or reducing the numbers of children in their setting, it does mean that those who are recently self-employed and do not have a full year of accounts will find it difficult to receive any help under this scheme.

Many childminders will also find it a challenge to find the finances they need to keep afloat between now and the beginning of June when the first payment will be made.

PACEY is continuing to press Government for additional support to ensure that childcarers – who are playing such a vital role in ensuring that key workers can continue to go to work, save lives and keep the economy going – are able to sustain their businesses. 

But what practical support is available right now to help you through the crisis?

See how you can reduce your monthly outgoings

Mortage / rent

If you have a mortgage, this is likely to be your biggest outgoing, so during the crisis there are some options to help you minimise your monthly costs.

  • The base rate is now the lowest its been in 325 years. If you’re on a tracker or variable rate, you should see your mortgage payments reduce.
  • Many banks are offering mortgage payment holidays so get in touch with your bank to see what’s possible – remember to always get agreement for a repayment holiday to avoid penalties or default.
  • If your mortgage term is coming to an end, look around for the best deal to reduce your monthly outgoings.

If you are renting:

  • Speak to your landlord as soon as you can if you think you’ll struggle to pay your rent during the coronavirus outbreak and see if you can come to an arrangement about repayment.
  • The Government has put new measures in place asking landlords to be compassionate and allow tenants to stay in their homes wherever possible.
  • If you are claiming universal credit, then you may be eligible for further financial help with your housing costs. For instance, you could ask your landlord to apply for an Alternative Payment Arrangement which means that your housing benefit will be sent directly to your landlord.

Energy / water bills

Get in touch with your energy company. Many are pushing back bill dates. Others are removing late payment charges for those struggling with finances. There’s a good energy bill help guide on MoneySavingExpert.com which you may find helpful.

Payment breaks or holidays may also be available with water firms for those struggling.

Council Tax

Contact your local council as you may be able to get a discount or payment holiday on your Council Tax or receive a Discretionary Housing Payment.

Cards and savings

Most banks and credit card firms are allowing emergency credit limit increases, while others will offer repayment holidays and waive fees for missed payments. Check with your credit card company, but be wary of taking on extra credit unless you really have to. The Government Coronavirus Business Interruption Loans have now been extended to the self employed, so try this if you need a loan to get your through the crisis.

The interest rate cuts will mean that your savings will have taken a knock too. If you have a fixed-rate savings account, there is often a penalty to get money out before the fixed term is up. Get in touch with your bank, as many are waiving these penalties for those affected by the COVID-19 outbreak.

MOT

If you own a car, the Government has granted a six-month exemption from MOT testing. This won't come in until Monday 30 March so if your car is due an MOT before then, you must still take it. You must also ensure that your car is safe and roadworthy.
 

Universal Credit

If your income is low, or if you’re not working, then Universal Credit is available for both self-employed and employed workers. The Government has made a number of changes to this benefit during the coronavirus crisis, including increasing the standard allowance and removing the minimum income floor (which will benefit self-employed childminders).  

The amount you get will depend on a number of factors, including your earnings (and your partner’s if you live together), whether you’ve got children, and amount of savings. There is a handy tool on MoneySavingExpert.com that you can use to check what you might be entitled to.

If you are a new claimant, you need to apply for Universal Credit online at https://www.gov.uk/universal-credit/how-to-claim

It will usually take around five weeks for the benefit to come through, so here are some options available if you’re really struggling:

  • Apply for an advance – you can ask for an upfront payment within five days rather than waiting for your first payment. However, you need to be aware that this is a loan. That means repayments will be deducted from your Universal Credit payout in the future.
  • Budgeting Advance – this is available to help with emergency household costs of up to £348 if you're single, £464 for couples or £812 if you have children. These are only to help with emergencies like your cooker breaking down and you’ll have to repay any advance through your regular Universal Credit payments.
  • Foodbanks – We really hope you don’t get to this stage, but if you're really struggling to buy the basics, you can find your nearest food bank on the Trussell Trust website.

And watch out for scams

Sadly, we have seen an upsurge in the number of reported fraud relating to coronavirus. Most of these are online shopping scams linked to buying products such as protective face masks and hand sanitiser. There have also been hundreds of reports of phishing emails which trick you into revealing sensitive or financial information or opening links / attachments. Make sure your computer is protected with the latest virus software – and beware of clicking on any link in any message that looks suspicious.

You can read more about the support available to you on this blog. And you can find useful tips and guidance about other ways to manage your finances during the coronavirus outbreak at MoneyAdviceService.org.uk and also MoneySavingExpert.com.

Key takeaways

This is an unprecedented event. The whole world is affected by the spread of COVID-19 and the government is working to create new systems of support in just days.

Ask for help. If you need a break in payments for your mortgate, for example, always get permission from your lender. Simply stopping payments will likely cause more difficulties for you.

 

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