Coronavirus and money: An expert financial guide from MyBnk

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Since the outbreak of coronavirus, so many things about normal everyday life have been disrupted or stopped altogether. Pubs, restaurants and shops have closed their doors and the recent lockdown rules have meant many workplaces have had to close or switch to remote working. Some people have lost their jobs, or are unsure how long they can continue working.

You might be feeling uncertain about the future and understandably, lots of you will be anxious about money and have questions about what this means for your finances. We’ve teamed up with MyBnk to answer as many of those questions as we can. MyBnk are a charity who work with young people to offer them a financial education and support them with money-related issues.

Things to be aware of when reading this guide:

The situation is extremely fast moving and there may be new information that arises, but we will try to update you as much as possible.

There is a daily address by the government every day (at approx 5pm) with the latest updates.

Employment information and benefits

From 6 April the government has increased the standard allowance in Universal Credit and the basic element in Working Tax Credit for one year. Both will go up by about £20 per week on top of the planned increase this year, for 12 months. This will apply to all new and existing Universal Credit claimants and to existing Working Tax Credit claimants.

From April, Local Housing Allowance rates have been increased to reflect the lower end of market rents. This will apply to all private renters who are new or existing Universal Credit housing element claimants, and to existing Housing Benefit claimants.

What does being furloughed mean?

Firstly being furloughed is not the same as being fired or being made redundant. Furloughing is your employer putting your employment on hold – usually with no pay. If you have ever seen news about when the American government shuts down, you may have heard them mention staff being furloughed here.

The difference now is that the government is offering to help companies to keep staff on furlough rather than making them redundant – they will pay your employer 80% or your salary, up to a max of £2,500

While you are furloughed, you are not allowed to undertake any work for your employer. They can contact you but only to check in and to let you know about important back to work info. You can work for others or volunteer if you want.

If your employer required you to return to work, they should give you “reasonable” notice – this may vary from person to person based on personal circumstances – childcare concerns, travel vs working from home etc.

It is important to know that your employer may still make you redundant later – the furlough scheme does not “protect” any jobs directly. If your employer goes bust, for example, the payments will also stop.

I’ve just lost my job

If you are temporarily unemployed, you should apply for Universal Credit or New Style Job Seekers Allowance if you have worked for the last two years. This will help you get through the time without a job – you can find out more about claiming benefits here. Remember that the government is offering to help companies with wages so you should check with your company about your status if you aren’t sure.

The government is also offering to pay 80% of wages for employed staff if companies need to ask workers not to work during the situation. This is to be arranged by your employer – if you are unsure if they are taking part in the scheme, check with your boss. Find out more information from The Money Advice Service here.

From 12^th of May, Chancellor Rishi Sunak extended the scheme for employed people until October 2020. However, the government has said that from August they would expect employers to contribute to wage costs. This might mean people are asked to come back to work on a part time basis with the employer paying for the hours and the government topping up the rest.

There is a danger that once the scheme ends that people may be made redundant. This is, at the moment, an option that any employer can take. You do have rights to redundancy pay if you have worked for at least 2 years, check out this government advice for more information.

What about self employed people?

The government has now announced a similar plan to help self employed people to the one for employed people. There are some rules about who can and can’t claim this help but if you are eligible, it’s a grant for 80% of your monthly profits which you will need to report on your next tax return. For more info, you should check out this Money Advice Service piece.

The self employed can make a claim in August for a second grant. This is, however, the final grant that will be issued according to the government. This time, however, it will only cover 70% of the average profits rather than 80% for the first grant. The maximum people can claim for this grant is £6,570.

What if I get sick or get told I have to stay home?

If you are employed and sick, you should talk to your employer about their sick pay policy as soon as possible. At the least, you will receive Statutory Sick Pay (SSP) of £94.25 per week, but many employers will pay closer to your normal wage for a period of time. SSP can be paid for up to 26 weeks.

If you are self employed and you get sick or are asked to stay at home, the government has made it simpler to claim Universal Credit or Employment Support Allowance – you will also be eligible from the first day of sickness or isolation, rather than the usual eight days.

There are also some temporary changes to the benefits system

The government has cancelled all face-to-face benefits assessments or appointments at the Jobcentre Plus and won’t rebook them until at least 19 June 2020.

This means you don’t have to go to:

• interviews if you’re starting a new claim for Job Seekers Allowance, Employment Support Allowance or Universal Credit

• medical assessments for ESA, Universal Credit or Personal Independence Payments

• appointments with your work coach

The Jobcentre Plus might still ask to talk to you by phone – if they do you should make sure you keep your appointment just like you would in person.

You can still go to the Jobcentre Plus – for example if you want to hand in a form – but this should only be if there is no other way to do what you need. If possible, stay at home and use the websites to access help.

Housing

Speak to your landlord if you’re struggling to pay rent. They could be sympathetic, especially if you’ve just lost your job or seen a reduced income. They might agree to a rent reduction or a later payment. Make sure you get anything you do agree on in writing.

Buy to let landlords may be given mortgage payment holidays if their tenants have financial problems due to the coronavirus.

Eviction protection

It is illegal for your landlord to evict you without following proper steps and is a criminal offence- coronavirus doesn’t change this. It’s likely to be an illegal eviction if your landlord makes you leave without notice/court order or locks you out of your home (even temporarily.) You can get help from the council or the court if your landlord prevents you from accessing your home.

If you’re a lodger, your landlord still needs to follow the correct process, even if you live with them. They don’t need to go to court but you’re usually entitled to notice before you can be made to leave.

If you’ve already had notice from your landlord you should still stay in your home. Under current law you don’t have to leave at the end of your notice. The Government have announced Emergency legislation to suspend new evictions from social or private rented accommodation during this national emergency. Landlords won’t be able to start proceedings to evict tenants until August 2020.

The support scheme for landlords has been extended until October. If you are privately renting, you should make sure you contact them to keep them informed of your situation if you think you will be unable to pay your rent and to see if they may be able to use the mortgage payment holiday to allow you to negotiate a way through for you both. Remember – you have no right to just stop paying rent, even if you know they have the mortgage payment holiday in place…you must discuss with your landlord.

Read this post by Shelter for more information.

Holidays

I haven’t got any travel insurance for my holiday yet – will I get my money back if it’s cancelled?

Firstly, you probably won’t be able to buy any insurance for travel now. As Covid-19 is now a known issue, you cannot claim for it cancelling your holiday. You should check with your holiday provider as many are offering flexible options or refunds. Remember, you should always try to buy travel insurance as soon as you book your travel as a good habit.

I have travel insurance – will I get my money back?

Since the Foreign and Commonwealth Office (FCO) now has an official advisory in place, most insurance policies will be activated and you should be able to make a claim. Don’t forget you may have to pay an excess so you may not get exactly what you paid depending on your insurance policy.

If you have your holiday booked as a package – flights and hotel together from the same travel company – most companies are offering cash refunds, rebookings or credit vouchers for use later in the year.

MoneySavingExpert has a page with a list of what individual insurers are doing about Covid-19 – you can check it out here.

What if I want to cancel future holidays? Will I get my money back?

The short answer is “it depends”! Some travel companies are allow customers to rebook holidays to later in the year now as a sign of good faith but unless the FCO is recommending you do not go to a country, most travel companies will have some fees for changes or cancellation. You should check with your holiday provider for more information.

The FCO advice is still to avoid all “non essential travel” – this essentially means holidays aren’t going to happen any time soon. A lot of travel firms have been issuing refund credit notes or vouchers instead of cash refunds – if you still want a cash refund, the LAW says you should get one within 14 days but in practice lots of companies are unable to do this and are having to delay these payments. In the immediate future there may be delays in refund payments.

You should also note that if the FCO lift their recommendation to not travel and your travel provider is willing to provide the service, you will probably not be able to get a refund from your provider.

For example, if you’ve got a beach holiday booked for October and travel restrictions are lifted, you would be expected to go. If you decided that you don’t want to go on holiday, you would have to hope your travel insurance covered your choice to cancel. If the FCO still says you shouldn’t travel in Oct, your supplier would probably offer a refund or credit note. Being scared of catching the virus or not wanting to wear a mask on holiday (for example) won’t be enough to get a refund in most cases.

The UK government is now requiring people to self isolate for 14 days after return from travel abroad. This might mean you need to consider this alongside everything else when thinking about booking a holiday. Breaking the self isolation carries a £1,000 fine.

You might find these articles from ABTA and Money Saving Expert useful.

Events

If you’ve bought tickets to an event that has been cancelled you should be entitled to a full refund if you have booked through an official seller (minus any booking/postage fees.) If you booked through a ticket-reselling site, refunds will depend on the T&C’s.

If the events gets moved and you can’t make the rearranged date, you should be entitled to your money back- UEFA is a good example, reassuring fans who can’t make the new 2021 dates that they will get a full refund. Some football clubs and events are still to release a statement about how this will affect ticket holders, however when in doubt check the event organisers T&C’s.

If you have heard nothing about the refund after two weeks, follow it up in writing if possible, so you have a record. You can also contact your credit card provider to help you.

If you used a credit card to buy something between £100-£30,000 means you are legally entitled to a refund if you don’t get what was promised. This is called “Section 75 protection” and you should call your credit card company for more info.

If the purchase was less than £100 or you paid with a debit card there’s still a chance of a refund under the chargeback scheme, this is used to reverse the transaction.

The Competition and Markets Authority (CMA) has put out additional guidance to businesses, including highlighting that it expects in most cases a full refund would be paid if a business has cancelled a contract without providing any of the goods or services as a result of the current lockdown – under the Consumer Rights Act 2015, you should get refunds if companies do not or cannot meet the obligations of your contract or purchase. This include things like childcare providers, wedding caterers, cleaners etc.

You might find this BBC article useful.

Budgeting

With lots of places being forced to close, people being asked to stop working for unknown lengths of time and the uncertainty of the situation, it’s so crucial you plan to budget your money during this situation.

If you are one of those who have lost work because of this situation, please check out our section on benefits to see what help you might be able to get with your income for the time being.

Use your savings

Firstly, if you‘re the sort of person who “saves for a rainy day”, THIS is exactly the sort of day you’ve been saving for! Don’t be afraid to use any savings you may have if your need them to get through this tough time. Be sure to ration your savings to make them last as long as possible and make sure you can still cover all your essential spending.

Avoid panic buying

Did you know there is approximately £1 billion worth of uneaten food in people’s homes due to panic buying? That’s a lot of cash to have stored in food you may end up throwing out if you can’t use it all. Avoid the temptation to panic buy – you may spend more than you can afford and if something changes, all that toilet roll might not help you.

Pay your bills on time if you can

At the moment, despite what you may have heard or seen, ALL BILLS NEED TO BE PAID AS NORMAL. While landlords have been offered protection on their mortgages, you are still expected to pay your rent to them. If you think you are going to struggle to pay ANY of your bills in the future due to this situation, call your landlord or supplier ASAP and see if you can work out a plan.

Many of the energy companies have info for low income households on how they plan to help – check with your supplier if you are worried about the bills in the next few weeks.

The other point to make is that EVERYONE is affected by this in some way. You may well find companies are more open to alternatives when it comes to payments – don’t be afraid to explain if you need help, and to take that help if offered.

Adapt your lifestyle

The other thing to say is you may well have to change your lifestyle to fit the current climate – some people might even find that they spend less money out due to shops being closed down! Be prepared to cook more at home, shop in cheaper supermarkets and use family and friends to help if available.

Supermarkets are looking for staff

If you are looking for work, check out the major supermarkets – almost ALL of them are recruiting now on temporary contracts while they work to keep the nation fed. If you are temporarily out of work and need to make some extra cash, it might just be enough to keep you going during this tough time.

Be wary of online shopping

Lastly – be careful about how much online shopping you do. It can be tempting to shop online now the high streets are closing but it also means we’re more likely to spend more than we plan to. Be aware of “boredom buying” – buying things just to keep you entertained.

Note that under the Consumer Rights Act 2015, you are entitled to a refund if you do not receive the service you paid for, no matter the circumstance. That means that if a supplier or store doesn’t deliver the goods or services you have paid for due to coronavirus, you are STILL entitled to a refund. If you have trouble with this, contact Citizens Advice for support.

You should also think about whether some of the freezes available on credit might help you get through this difficult time – check our debt and borrowing section below for more details.

You might find this Money Saving Expert article helpful.

Debt and borrowing

A lot of people are worried about being in debt at the moment, especially if they have lost hours, been temporally sent home or even made redundant.

Here’s a few things you should know about debt in this challenging time

Credit companies are very aware of the situation and most are responding to it by offering payment freezes or other helpful measures. In the first instance, you should call your creditors to discuss your situation if you think you will have trouble with keeping up with your payments.

Rent arrears

Rent arrears are a particular worry – no one wants to lose their home. However, for the next three months, you cannot be evicted. This doesn’t mean you don’t have to pay – you might arrange to pay later once your financial situation gets better for example.

Read our article on tenancy rights here.

Credit cards

If you have credit cards, some companies are offering to increase limits or offering fee free cash withdrawals. While this might help some people, you should think very carefully about taking these options – when the situation is resolved, could you afford to pay back the debt you built up?

The key here is to let people know ASAP if you need help. Don’t wait for the red letters to come through your door, call them now and see what help they can offer – you’d be surprised how helpful a lot of companies are with people who need help and how much better you’ll feel if you know what is happening.

From 14 April 2020 you can ask for:

• A three-month payment holiday on credit card debts and personal loans. This will not affect your credit rating.
• £500 interest free overdraft facility on your current account (the overdraft will be interest free for three months. If you are already overdrawn by less than £500 you won’t be charged any fees).

From 24 April 2020 you can ask for:

• A three-month payment holiday on car loans.
• A one-month payment holiday on pay day loans.
• A three-month extension on repayments on pawned items before the items you have pawned are sold.
• A three month payment holiday on any rent-to-own payments

Note that payment holidays do not cancel those payments – it just delays them. On accounts that have interest attached, you may accrue extra interest by taking payment holidays. The golden rule is to discuss you situation with your lender or provider and do so as quickly as possible.

Some useful further information from sources you can trust:

https://www.stepchange.org/debt-info/debt-and-coronavirus.aspx

https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19/support-for-those-affected-by-covid-19

https://www.moneyadviceservice.org.uk/en/categories/coronavirus

https://www.moneyadviceservice.org.uk/en/articles/coronavirus-and-your-money

https://www.moneysavingexpert.com/news/2020/03/uk-coronavirus-help-and-your-rights/

https://www.citizensadvice.org.uk/health/coronavirus-what-it-means-for-you/

https://england.shelter.org.uk/housing_advice/coronavirus

https://www.moneysavingexpert.com/news/2020/02/coronavirus-travel-help-and-your-rights/

https://www.bbc.co.uk/news/explainers-51738687

https://www.stepchange.org/debt-info/debt-and-coronavirus.aspx

https://www.understandinguniversalcredit.gov.uk/coronavirus/

https://www.lockdowngeneration.org/employment

I’m still feeling anxious about money

If you’re still feeling worried about your finances, that’s ok and we’re here to help. Money can be a really stressful issue to navigate, especially while everything is so uncertain. But our support team are here to listen, offer reassurance and connect you to the right advice. Head here to speak to our team of experts and trained volunteers.

Read our financial guide to deciding where to live.