When it comes to our experience of 2020, we might all be in the same storm, but certainly not in the same boat.
That is particularly true financially, where some have been able to add record amounts to their savings since March, while others wonder if they are about to lose their homes because they can’t pay the bills.
New figures from GoCompare suggest that 9.7million people will face Christmas on a reduced income this year, with people up to the age of 44 most likely to have seen income fall.
Lee Griffin, founder of GoCompare Money, says that millions of households are planning to use their credit cards and loans to cover the cost of Christmas, which could make things worse.
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‘Lockdown and other restrictions aimed at halting the spread of coronavirus have plunged the UK into recession, leaving millions of households struggling to manage on reduced incomes,’ he says. ‘If you are struggling to make ends meet, don’t ignore the problem in the hope it will go away. There is financial help available.’
There are several reasons why financial hardship is particularly acute this year, and why it is hitting specific sections of the population hardest.
Lockdown two means that many people are still unable to work, and specific industries – such as events, hospitality, and the arts – are unable to function in any meaningful form.
Many employees in these areas are eligible for the furlough scheme, which the Government has now extended to March (with a review in January). This pays 80 per cent of salary, but is capped at £2,500.
The SEISS, a payment for the self-employed, pays out a similar amount – 80 per cent of average trading profits capped at £7,500 for three months.
Those eligible for these schemes may have lost a fifth or more of their income, which in many cases won’t be offset by commuting costs and other savings, but there are many who have lost even more.
These include many self-employed people, an estimated three million, who are not eligible for SEISS or furlough because they trade through a limited company, have had more than half of their money paid to them through PAYE despite being self-employed, or have earned more than £50,000 in recent years. Many of these people have received no financial help at all.
Aron Padley, founder of campaign group ExcludedUK, says that the lack of support has provoked a ‘huge mental health crisis’.
He explains: ‘We are now heading to eight months of no support and we are still in the exact same position as we were back in March. The eligibility criteria remains the same meaning those that were excluded initially remain in that same precarious position. People are desperate and don’t see a way out.’
The unemployment rate is also at its highest for three years, with an estimated 1.5million people out of work between June and August.
However, there are some steps you can take to help you get through this difficult time…
The benefits system can be rather bewildering, especially for the many people who are accessing it for the first time.
Many people who are struggling can claim Universal Credit, as long as their partner is not earning above a certain threshold and they don’t have more than £16,000 in savings.
For a couple over 25, the standard allowance is £594 a month, with an extra £281 a month for the first child.
One of the best ways to work out your benefits entitlement is to use this benefits calculator.
The self-employed who claim Universal Credit will now not suffer a drop in their income due to the removal of the ‘minimum income floor’, which treated them as if they were earning a certain amount when calculating their benefits. This will not now be reinstated until April.
Help with your bills (including housing) Now that lockdown two has been announced, the Government is consulting with banks and other lenders over a number of extended schemes aimed at helping people to pay bills during this difficult period. This includes the extension of the current mortgage holiday scheme, for a further six months.
A mortgage holiday is a break taken from paying your mortgage that does not affect your credit rating or put you at risk of losing your home.
However, it’s worth noting that interest continues to rack up on your housing debts if you take one of these, and you are likely to end up paying more for your home overall.
While the application deadline for new holidays has been extended, there’s no automatic right for those who have already had a payment holiday to continue not to pay.
Brian Murphy, head of lending at the Mortgage Advice Bureau, says that those who have already taken a holiday on their mortgage but need more can talk to their lender about extending it, although decisions on the length of extensions will be made on a case-by- case basis.
‘It’s important to remember that you should only apply for an extension if absolutely necessary. Your lender will be able to determine this with you, so be sure to have all your outgoings ready to share, including bank statements and official documentation,’ he says.
You can also apply for a payment holiday on loans or credit cards. Borrowers who have not yet asked for this breathing space can do so up to January 2021, with an initial term of three months and an option to extend.
You can also ask for an extra three-month payment holiday if you have already had a credit-card or loan payment break. You will still be charged interest on a payment holiday, so will end up paying more in the long run, but it can give you breathing space if needed.
If your credit rating is good, though, you may instead be able to shift your credit card debt onto an interest-only credit card, which could give you up to 29 months to pay off the debt without racking up interest.
There is also the possibility of a one-month deferral on payday loans, while banks and building societies are being urged to help by offering free or cheap overdrafts
Eric Leenders, managing director of Personal Finance at UK Finance, suggests that customers should wait for updates on how to apply for these.
He says: ‘Customers seeking to access this support do not need to contact their lenders yet and should wait for further updates on how to apply once these measures have been finalised.’
It is also expected that home repossessions will be prohibited until the end of January 2021. Evictions for non-payment of rent are also not expected to be enforced in England until January 11 next year at the earliest.
There is more detail about the latest eviction rules on Shelter’s website.
Your tax bill
Many people will struggle to pay a large tax bill in January 2021 due to coronavirus restrictions, especially since the government allowed deferrals of the July ‘payment on account’ this year.
You can set up a payment plan to pay your tax in instalments online as long as you don’t already have tax debts. You can also speak to HMRC on 0300 200 3835.
Grants and other help Self-employed people without support may be able to apply for Bounce Back Loans, which do not need to be paid back for a year and do not have to be spent specifically on business expenses.
There is more detail on how to obtain these on the British Business Bank webpage .
For those in specific industries that have been affected by coronavirus, there are also grants that you can apply for.
There is a list of funds available for musicians, composers and performers, and a list for freelance artists and actors.
For those looking for grants available in the hospitality industry, check out Hospitality Action.
‘I’m scared. I never wanted to be a burden.’: Gail’s story
Gail Diovisalvi, 62, from Lincolnshire, had a job setting English exams. With all exams cancelled, though, her work dried up completely.
And, because many exam boards had paid her through PAYE, she was ineligible for the SEISS self-employment grant and the boards were unable to furlough her.
‘I’ve had the odd bit of work, but basically nothing,’ she says. Gail (left) had just moved to Lincolnshire to be near her children and, although she was given a mortgage holiday initially, she’s been told she can’t have an extension to it because she is too old.
‘Besides which, the repayments were getting higher and higher and I was getting scared,’ she adds.
Gail sought help from the Citizens Advice Bureau, and is entitled to a selection of benefits, but says that her children have had to help her pay the mortgage.
‘I never wanted to be a burden,’ she says. She is calling on Rishi Sunak to extend help to the estimated three million people like her who have not been eligible for any of the Government’s safety nets.
‘It’s been eight months now, and I’m scared,’ she says. ‘I did believe the Government would help me but they’ve let us down.’
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