SOME of the support for people struggling financially because of the coronavirus pandemic is set to end on 31 October.
Major help like the government’s furlough scheme and banks offering payment breaks will no longer be available – here’s what’s changing and what help you can still get if you’re struggling.
1. End of furlough
The government has covered the wages of millions of workers since the start of the pandemic thorough the furlough scheme, which covers 80% of wages of people up to £2,500 a month.
Some of it is paid by the government and some of it by the employer and the exact share has changed over time as the scheme has evolved.
Some companies have also chosen to top up the pay of furloughed staff up to 100% of their normal wage.
This scheme ends on 31 October but there are now new schemes in place as the coronavirus continues, supporting those who can’t work or who are working reduced hours.
For those who can’t work at all because the business is closed due to the highest level of lockdown measures, there’s the lockdown Job Support Scheme where the government will cover two-thirds of people’s wages.
And there is also the part-time job support scheme, which is for those who can work but who are doing less than their normal hours.
The government and the employer will cover two thirds of the wages for the hours someone can’t work.
When this scheme was first announced workers had to be doing at least 33% of their normal hours, but changes announced by the chancellor Rishi Sunak mean this has been reduced to 20% and means more people should be eligible.
One in 10 workers remain furloughed and the schemes are designed to support jobs but there are fears that there will be a wave of redundancies when furlough ends.
What are my redundancy rights?
BEFORE making you unemployed, your employer should still carry out a fair redundancy process.
You are entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you’ve been working somewhere for at least two years.
How much you’re entitled to depends on your age and length of service, although this is capped at 20 years. You’ll get:
- Half a week’s pay for each full year you were under 22,
- One week’s pay for each full year you were 22 or older, but under 41,
- One and half week’s pay for each full year you were 41 or older.
Sadly, you won’t be entitled to a payout if you’ve been working for your employer for fewer than two years.
There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.
You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.
2. End of interest-free overdrafts
At the start of the pandemic, all banks agreed to offer overdrafts that were interest-free up to £500.
Some banks offered this automatically while with others customers had to request it and there have been 27million offers of a free overdraft in total.
This financial buffer for anyone struggling comes to an end on 31 October but there’s still time for anyone who needs it to ask their bank.
There will still be help available after this date too, but it will be at the bank’s discretion.
Anyone who has received this support will be contacted by their bank to see if they need further assistance.
And anyone who didn’t but finds themselves struggling will be able to get help too.
This could include the bank reducing interest or waiving interest altogether or transferring the debt depending on your circumstances.
This help from 1 November can affect your credit file but the bank must explain this to you first.
How to apply for a payment holiday or help with your overdraft
HERE are the help pages for all the major banks so you can see what help you may be eligible for – and how to apply for it.
Credit card holidays
Loan repayment holidays
3. Mortgage holiday application deadline
Homeowners have been able to take a break from repaying their mortgage if their finances have been impacted by the pandemic and more than a million people have already taken a break
The deadline for applying for this payment break for he first time, or the second time if you’ve already taken a break, is 31 October.
The break is temporary and interest still builds up which can mean you pay back more in the long term, the length of the loan can be longer or repayments higher when you do start paying them back.
These payment holidays will not have a negative affect on your credit file.
After 31 October, there will still be help available and anyone experiencing financial difficulty is urged to get in touch with their bank or lender as soon as possible.
The help available will be tailored to individuals and may still include a payment break but could be other support, but it will not be the kind of blanket-wide approach offered before.
Support after this date may appear on your credit file but the bank should explain to you if that’s the case and what it means for you.
Anyone who has taken a payment holiday that is coming to an end should hear from their lender to talk through your options.
Remember, any breaks from mortgage payment must always be agreed with your lender – never just stop paying.
4. Borrowing help deadline
People with loans, credit cards and other types of credit have been able to take payment breaks to ease the pressure on their finances caused by coronavirus.
Banks and lenders were told by the financial regulator to make these payment holidays available for three months initially and then a further three months on top.
- credit cards
- car finance
- personal loans
- stores and catalogue cards
- buy-now-pay-later schemes
- rent-to-own policies
- payday loans
Many people have taken advantage of this, essentially pausing the money they have to pay back (though interest still builds up).
But this specific support won’t be extended any further and you have until 31 October if you want to apply.
After this, there will still be help available and anyone experiencing financial difficulty is urged to get in touch with their bank, lender or provider as soon as possible.
The help available will be tailored to individuals needs and may still include a payment break.
Anyone who has already taken a break will continue to pause payments for the period of time already agreed.
For example, someone who started a three-month payment break on 1 September would continue through to 1 December.
For anyone who has taken a break and is still struggling when repayments start again, there are new rules for support and lenders must consider suspending, reducing, waiving or cancelling any interest, fees or charges to prevent the debts getting out of control.
Any new help you get from 1 November onwards can affect your credit score, whereas lenders had agreed that the support for borrowers before 31 October would not impact credit scores.
The bank should help you understand how any support you get can affect your credit file.
Remember, any breaks from payment must always be agreed with your lender – never just stop paying.
5. End of free childcare
Parents in England can get 30 hours of free childcare for three- and four-year-olds when they work a certain number of hours.
It’s usually a minimum of 16 hours a week at the National Minimum Wage, but the government paused this requirement because of coronavirus.
Anyone whose income fell below this level could continue getting the support.
But this will end on 31 October, so anyone who’s fallen below this 16 hour criteria will not be able to get this free childcare.
What help is available to parents for childcare costs?
CHILDCARE can be a costly business. Here is how you can get help.
- 30 hours free childcare – Parents of three and four-year-olds can apply for 30 hours free childcare a week.
To qualify you must work at least 16 hours a week at the national living or minimum wage and earn less than £100,000 a year.
- Tax credits – For children under 20, some families can get help with childcare costs.
- Tax-free childcare – Available to working families and the self-employed, for every £8 you put in the government will add an extra £2.
Support after October
More than 12million Brits are likely to struggle with loans and bills as a result of the pandemic the financial regulator says.
Nearly a third of households saw their income fall with those from a black and minority ethnic background and young people most likely to be struggling financially.
The end of official support doesn’t mean that help is no longer available and the Financial Conduct Authority (FCA) is urging anyone in trouble to ask for help.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “We want to remind consumers, especially those who are newly in financial difficulty that lenders are able to provide you with support.
“There are options available to you which will reflect the uncertainties and challenges that many customers will face in the coming months.
“It is also important that households in serious financial difficulty seek debt advice for support.
Financial help if you’re struggling
If you find yourself struggling financially because you’re self-isolating are in a local lockdown, or any reason related to the coronavirus or not, there’s always help available.
Contact your bank or lender in the first instance if you’re struggling to keep up with repayments.
You’ll also find support and advice from the following organisations for free:
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