Financial help during the Covid-19 pandemic

How to get and save money during Covid-19…

Never before in our lifetime has the country – indeed the whole world – been in the grip of a major pandemic. We have all seen our lives change dramatically over the last few weeks, and no-one knows how long this will all go on for.

We do hope that you and your family are safe and well, and that you are managing to cope with all the restrictions that now form part of our daily lives. 

But as well as the health and social distancing issues, many of us are also struggling with our finances. Some of us are still able to keep working, whether as key workers or from home. But many others have either been furloughed or lost their jobs, and many small businesses have had no choice but to stop trading, either temporarily or permanently. These are hard times for everyone.

To try and help you find your way through, in this article we will look at what financial help is available if your job or business has been affected by Covid-19.

If you are employed but on furlough

The government’s new job retention scheme enables companies to put their employees “on furlough” during the Covid-19 pandemic. Furlough means that you are still employed by the company but they do not currently have any work for you to do. So you can stay at home and do not need to go into your place of work, or do any work from home. 

Any company of any size that employs other people can apply to the government to put their staff on furlough. The job retention scheme is planned to be up and running by the end of April and payments backdated to the beginning of March. It will initially run for three months but may be extended if needed.

You need to agree with your employer to be put on furlough before your employer can apply to the government. The application has to come from your employer: you do not need to apply for it yourself.

The government will pay your employer 80% of your monthly salary during this time, up to a maximum of £2,500 a month. Your employer will then pay you this money, and can also choose whether to top up the amount to your normal full pay. 

You will still continue to pay income tax and national insurance contributions while on furlough. Most furloughed employees are entitled to do other temporary work whilst on furlough to earn extra money; but do check with your employer first in case there is anything in your contract that says you cannot do this.

If you are self-employed

If you are self-employed and are losing income during Covid-19, the Self-employment Income Support Scheme (SEISS) may help you. 

The scheme is open to people who have been self-employed since before April 2019, whose main income comes from self-employment, and have average profits of less than £50,000. You must currently be trading (or would be except for COVID-19), intend to continue trading in the tax year 2020-21 and have lost trading profits due to COVID-19.

SEISS enables you to claim a grant worth 80% of your trading profits, up to a maximum of £2,500 per month for 3 months. Grants are expected to be paid from the beginning of June, in one instalment.

HMRC will base the exact amount you are given on the average profits from your tax returns in 2016-17, 2017-18 and 2018-19. If for any reason you have not yet submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

If you began self-employment later than 2016, HMRC will only use those years for which you filed a Self-Assessment tax return. However, if you began self-employment after April 2019 – so do not have any tax returns on which HMRC can base your average profits – you will not be eligible for SEISS. In this case, you may be able to claim Universal Credit.

You do not need to apply for this scheme. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. You will then apply online and grants should start being paid out by the beginning of June 2020, directly into your bank account. 

Although the scheme will initially run for three months, it will be extended if needed. If you are in financial difficulty between now and June, you may be able to claim Universal Credit.

If you run a small business

There are various measures in place to help you during Covid-19. If you employ other people but are having to close temporarily, then you can furlough employees under the job retention scheme as described above. You can apply for a grant that covers 80% of their usual monthly wage costs (up to £2,500 a month) plus employer NI and pension contributions. Check out the Gov UK website for how to do this.

If you are still running and are having to pay SSP for staff, you may be eligible for the Coronavirus SSP Rebate Scheme. This reimburses you for SSP paid to current or former employees from 13 March 2020, if either they have Covid-19 or are self-isolating.

Depending on the nature of your business and your circumstances, you may also be able to defer other business payments, as follows. 

• VAT payments. If you have a VAT payment due between 20 March 2020 and 30 June 2020, you can either pay as normal or choose to defer the payment until a later date. Find out more here.
• Self-assessment payments. There will be no penalties (or interest for late payment) if you are due to pay in July 2020 but defer payment until 31 January 2021. You do not need to notify HMRC of your intention to do so, the deferment is open to all.
• Business rates. If you run a retail, hospitality or leisure business in England, there will be a business rates holiday for the 2020 to 2021 tax year. You do not need to do anything to access this; your local authority will reissue your bill.

If further financial help is needed, there is a temporary Coronavirus Business Interruption Loan Scheme, which can provide small businesses with access to loans, overdrafts, and other business finance. The government is also offering a Business Interruption Payment to cover the first year’s interest payments and fees on the loan. The loan scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.

If you have lost your job

If your company has closed because of Covid-19, and you are owed money, the first thing to do is to check with your employer whether they can claim any of that money for you from the government under the job retention scheme (see above), as that is backdated to the beginning of March.

Your next course of action is to claim Universal Credit. It is then worth looking at other benefits that might be available, depending on your particular circumstances. Try one of the following benefits calculators for further help:

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Policy in Practice

Entitled To

If you are too ill to work or are self-isolating

If you are employed and become ill, you need to speak to your employer as soon as possible. Many employers, particularly larger companies, have their own sick pay scheme. If not, then your employer must pay you Statutory Sick Pay (SSP). This is £95.85 per week and is paid for up to 28 weeks.

SSP also now applies if you are self-isolating, either because you are ill with COVID-19 or are in the same household as someone who has it and are therefore doing a household quarantine. The self-isolation needs to be at least 4 days duration.

If you are self-employed you are not eligible for SSP. If you either become ill with COVID-19 or are advised to self-isolate, you may be eligible for Universal Credit and/or New Style Employment and Support Allowance.

We hope that the above information helps to point you in the right direction to find money that you may be entitled to during Covid-19.

In one of our next articles we will look at ways that you can save money and live more cheaply during Covid-19, whatever your circumstances. So do check back here soon.

Meanwhile, stay well.