CORONAVIRUS AND YOUR FINANCES
WHERE TO START
We'll get through this. Get comfy and read through these resources I have found to be reliable and helpful.
Three good places to start: 1) the https://www.gov.uk/coronavirus. There is a section here for employment and financial support and another for businesses and other organisations, 2) lean on your accountant for support and advice on your own situation. Crunch have done a great job of laying out available support here, and 3) MoneySavingExpert has done a great job of keeping us up to date on the support available here.
You can also call the Citizens Advice Bureau with your specific questions here: 0344 411 1444.
The government have committed to support full-time employees by paying up to 80% of salaries up to £2,500pcm. Speak to your employer to see if this is the case at your company.
Here are your rights if you're laid off or your hours are cut: https://www.gov.uk/lay-offs-short-timeworking
- If you are off work with symptoms of Coronavirus, you may be eligible for new style employment support allowance.
You may also want to join a union to feel supported and part of a community in your field of work.
BENEFITS & TAX
Universal Credit: The minimum income floor has been suspended for UC, so you may be eligible regardless of how much money you were previously earning. It's paid at the same rate as statutory sick pay, plus £1,000 a year, for the next 12 months. Working Tax Credits will also increase by the same amount. To qualify, you need less than £16,000 in savings and you can't live with a partner earning more than £12,500p.a (as it's calculated per household). The maximum you can receive is £4,813p.a (£408p.m.), but personal savings over £6k will reduce this amount. Calculate how much you're entitled to here: turn2us.org.uk and apply here: https://www.gov.uk/apply-universal-credit. Note that it may take 5 weeks to start receiving the money, so get to it.
Self-assessment tax bill: The return date has been deferred to January 2021, but you still have to pay it.
If you cannot pay your remaining self-assessment tax bill for the last tax year, or your business owes VAT, PAYE or corporation tax bills, HMRC may offer payment breaks up until June, or offer the option to change your monthly instalments to make them more manageable for you: https://www.gov.uk/difficulties-paying-hmrc
VAT bills deferred: No business will have to pay VAT from now until June. Currently, you will have until the end of the financial year to pay.
CAMPAIGN FOR UNIVERSAL BASIC INCOME! Many people have already lost their jobs due to Corona, others like freelancers or zero-hour contract workers are not getting enough government support and too-often-ignored like the homeless or migrants may not qualify for financial support. Follow @robertahollis on instagram who's doing amazing work in this space, download her template to write to you local MP in support of a universal basic income for all: https://www.roberta-hollis.com/universal-basic-income-letter, and sign a petition for a temporary universal basic income for all here: https://speakout.38degrees.org.uk/campaigns/7236
Call the small business helpline with your specific questions here: 0300 456 3565 (England). Or if you're elsewhere in the UK, visit here: https://www.gov.uk/business-support-helpline
Check to see if your business is eligible for business rate relief here: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-that-pay-little-or-no-business-rates
If your small business has experienced lost or deferred revenue due to coronavirus, you may be eligible for the coronavirus business interruption loan scheme: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/. It's a loan and you will have to pay it back.
Facebook small business grants: Facebook is offering $100M in cash grants and ad credits for up to 30,000 eligible small businesses in over 30 countries https://www.facebook.com/business/boost/grants
PERSONAL FINANCE TIPS
1) Savings, Investments and Debt
Get really clear on what you currently own and owe. Where that money is and how accessible it is to you should you want to use it. Ideally we wouldn’t cash in investments at a time like this, but its important we’re aware of what our options are in various scenarios.
Tax & NI contributions: Get clear on govt guidelines about what tax payments you owe that can be delayed or postponed. How much have you been putting aside through the year for your tax and NI contributions? Can you update your accounting for the year just gone to see if you have any surplus savings reserved for tax that you can repurpose? If you have income tax payments due in July 2020 under the self-assessment system, you can defer them until January 2021.
Emergency funds: How long will any savings you have last you based on what you actually need to spend in the next 3-6 months? If your income hasn’t been affected by COVID-19, can you increase how much your saving into your emergency fund in case this crisis goes on longer than any of us are hoping for?
Pension contributions: Is this something you might temporarily stop? Pensions are a form of investing and we get tax benefits from contributing, but it may be an option for you if you need it.
ISA: If you need to take money out of ISAs make sure you’re aware of the penalties in terms of charges or missed longer term opportunities of doing so.
Any other savings pots you have: Any savings set aside for money goals that you might need to repurpose? How accessible is this money to you right now? If you needed it, how quickly can you access it and at what cost? Ideally, we wouldn’t need to cash in any investments, but knowing what our options are is helpful.
Credit cards and personal loans: FCA suggested that repayments for those struggling should be frozen for up to three months for those in trouble. But banks don't have to do this yet. Call and ask what your provider can do for you.
Overdrafts: FCA confirmed that banks won't charge interest on first £500 of existing and arranged overdrafts for 90 days.
Airmiles: cash them in if not going to be using them for a while?
2) Must-have spendings
Mortgage/rent: Mortgage payment holidays now widely available for three months. Emergency legislation is protecting renters from being forcibly evicted if they cannot afford to pay due to coronavirus. If you can, collect evidence that your income has been affected by corona to share with your landlord if required.
Council tax: if you are on a low income or claiming benefits, you may be eligible for council tax reduction. Visit the gov website to check your eligibility.
Water, Gas, Electric bills: If pay by direct debit, check your account to see if you have a surplus in there and can reduce your payments for a while. Call providers and see what payment plans they can offer. Case-by-case basis. Can switch without paying exit fees up to 56 days before contract comes to an end.
TV, phone, internet: Main providers in UK agreed to remove data caps on fixed-line broadband. Call TV and mobile providers to see if payment plans can be offered or reduce usage.
Some people find it helpful to move all must have spends onto direct debits so they know exactly what's going out each month.
Talk to your accountant about what work from home costs you can claim as business expenses.
Less frequent must have spends (e.g. service charge, ground rent, insurances, road tax and MOT, parking permits):
We don’t want any nasty surprises right now so make sure you diarise key dates and plan for these or see if you can postpone them. MOT extension for 6 months if due after 30th March.
List out all of your must-have spendings - monthly and the less frequent ones - to give yourself an idea of how much money you need in next few months.
What else, what else, what else can you do to try and reduce your must have spending?
3) Everyday spendings
If we’re self-isolating, one silver lining is that some of our every day expenses will not be spent. Look at last months statement and see how much you won’t be spending. How can you capture some of this as savings?
Think about your lifestyle last month. What things did you regularly spend money on that you are really missing and what things aren’t you missing so much?
Food & travel: likely to be reduced
Travel to & from work: if you have seasonal travel tickets, many providers are offering refunds no these. Contact your provider to request one.
Socialising: have you spent money on events or trips that are no longer going ahead? If you can’t get a refund from the company itself, call your bank and they may be able to offer you compensation instead.
Pay yourself the savings you have made from moving in person socialising to virtual socialising.
FREE TRIALS that you sign up to: take note of dates when you would be expected to start paying again so you can cancel or budget for them.
Subscriptions & direct debits: Check all cards and phone apps. Cut where you can. If struggling to choose, how can friends help each other by sharing accounts? Or play a game of would you rather with two of them. Look at all your direct debits and subscriptions and cut where you can. Remember to check your phone for app subscriptions too. They are all reversible at a later date.
4) Giving & supporting
In the hustle and bustle of every day life, where we save and spend our money is often more impulsive than it is conscious, but we have an opportunity right now to pause, reflect and reset our spending habits and a chance to think about what impact we want our money habits to have on our lives, but also society and the planet as a whole. I really believe we can make a positive difference when we make more conscious spending decisions.
Lots of us want to help those affected by COVID-19: the NHS, the vulnerable, local businesses and freelancers etc. If you have the capacity financially, what causes really matter to you that you want to support financially and how best can you do that?
What groups is it important for you to support? Local businesses through buying vouchers, paying for work from creatives and freelancers, donations to charities or organisations, switching to an ethical or sustainable bank provider? So, to finish on a positive note, this is a chance for us to reset our money habits and align them to a world we believe in.
ASK the question! - payment holidays, reduction of interest rates, switching balances to 0% or lower interest products.
REMEMBER that payment holidays are exactly that - holidays. You may still be charged interest and have to pay back at later date. And any loans you take to help you through this time will have to be paid back (likely with interest) and budgeted for in the future. Diarise key dates for payments starting and due so you can prepare financially and start to put money aside where possible. Grants do not need to be paid back.
Open and honest conversations about money are more important now than ever, with clients, suppliers, employers, financial providers, partners and those you share a home with. The goal is to understand and empathise with each others situation and help each other through difficult times.