Financial support for those affected by coronavirus

The Chancellor has announced new measures to extend financial support to those struggling to make ends meet during the second lockdown, but it’s not always easy to know who qualifies or how to claim.

Lots of people have seen their incomes plummet as their work has dried up, are facing redundancy, or are unable to work because they are self-isolating or unwell. These can be really worrying times, so it’s vital to get all the support you possibly can.

Here’s what you need to know about some of the benefits and financial help that you might be eligible for during these difficult times.

Government help if you’re employed

Support if you’re put on furlough due to business closures

The government’s Coronavirus Job Retention Scheme was set up to try and avoid companies having to make people redundant whilst they themselves are forced to close for business. Under the scheme, businesses could choose to put some employees on ‘furlough’ (which essentially means not asking them to work for a set period of time), instead of making them redundant.

For any employees put on furlough, the Government initally paid 80% of their wages, up to £2,500 a month. This was paid through normal payroll, with the Government reimbursing employers afterwards.

The furlough scheme was due to finish at the end of October, but it has now been extended until the end of March. It will remain at 80% of wages up to £2,500 a month and will apply to both full-time and part-time employees. Employers must cover national insurance contributions (NICs) and pension costs at least until next January, when the government will decide whether they should contribute more than this. The scheme is available to employers across the UK, even if they haven’t previously used it. 

Only employees on a company’s payroll prior to 31 October can be furloughed. Those who’ve been made redundant since 23 September can be re-hired by the company they worked for and furloughed, but it is up to individual companies to decide whether or not to do this.

Whilst we sincerely hope that the extension of the furlough scheme will reduce the number of redundancies made in the UK (and it will be of huge value to you if you are offered this option instead of being made redundant) it is likely to be a case by case situation as to whether you can benefit from this scheme, and will depend on your employer and their own set of circumstances.

You can find out more about help for businesses and their employees here.

Financial support if you’re sick, self-isolating or shielding

Those who need to self-isolate from 28 September onwards who are on low incomes may be eligible for a £500 payment from their local authority if they will lose out financially from having to stay at home.

You should be eligible for the payment if you’re self-isolating and you’re claiming Universal Credit, Working Tax Credit, income-based Employment and Support Allowance, income-based Jobseeker’s Allowance, Income Support, Housing Benefit and/or Pension Credit.

According to the government, just under four million people who are on benefits in England will be eligible for this payment. Find out more here.

If you’re not eligible for the £500 payment and are unable to work because you’ve got coronavirus or have to self-isolate, you’ll usually be entitled to the same amount of sick pay and leave from your employer that you’d get if you were off work with any other type of illness.

Employers can either offer statutory sick pay, which is the minimum they must pay you by law if you can’t work because you’re unwell, or some may provide their own more generous rates of sick pay. If you have coronavirus or have to self-isolate, you’ll therefore be entitled to either statutory sick pay or your usual sick pay.

To be eligible for statutory sick pay, which in the 2020/21 tax year is £95.85 a week, you must be employed rather than self-employed and normally earn at least £118 a week before tax. In order to claim it, you’ll need to let your employer know that you’re unwell or self-isolating within seven days, or earlier if your contract states a shorter deadline. You only need a sick note if you’re off work for more than seven days.

Usually statutory sick pay is only payable from day four of your illness, but the Government has confirmed employees affected by coronavirus can now claim it from day one. This measure applies retrospectively from March 13.

If you are self-isolating, you can ‘self-certify’ for the first 7 days off work, which means you’ll have to let your employer know as soon as possible, but you won’t have to get a note from a doctor or NHS 111. If you’re self-isolating due to coronavirus for more than 7 days, you can get an online self-isolation note either from the NHS website or the NHS mobile phone app.

If you’re shielding because you’ve received a letter warning you are at high risk of becoming seriously ill from coronavirus, your employer may allow you to work from home if you’re able to, or they can furlough you under the Coronavirus Job Retention Scheme. If your employer decides not to furlough you, and you can’t perform your job from home, you’ll be eligible for statutory sick pay, as you’ll be incapable of working during the shielding period.

For more information you can visit ACAS to find out the latest advice for both employees and employers. ACAS stands for Advisory, Conciliation and Arbitration Service, an independent body that works to improve workplace relationships between employees and employers. 

Financial support if you have been made redundant or have lost your source of income

Being made redundant can be a hugely unsettling time. One thing you can do to help feel more in control of what’s happening is to read up on your rights, understand the process itself and start making plans to help you move forward. We have a whole section of our site dedicated to going through redundancy which you can find here.

Universal Credit

If you have been made redundant or lost your income, you may be eligible to claim Universal Credit, which is a benefit paid to people who are unable to work, or who are on low incomes and need a bit extra to make ends meet.

The amount you’re entitled to is means-tested and will depend on your individual circumstances. You won’t usually be eligible for Universal Credit if you have £16,000 or more in savings.

The maximum monthly amount you can claim if you’re single and aged 25 or over is £409.89 a month, or £594.04 a month if you’re in a couple and both aged 25 or over. Find out how to claim Universal Credit here.

According to government guidance, the majority of public services including job centres will continue during the second lockdown and you will be able to leave home to visit them. If coronavirus stops you from going to a job centre to claim Universal Credit, you can complete your claim and get an advance payment online. The job centre might want to talk to you by phone but you should not have to go in person. People who need to claim Universal Credit because of coronavirus will not be required to produce a sick note. You can find free sources of help if you’re making a benefits claim here.

Contribution-based Employment and Support Allowance

You may be able to submit a claim for Employment and Support Allowance if you’re employed, self-employed or unemployed. It’s there to provide you with financial help if you’ve got a health condition or disability that affects how much you’re able to work.

You can’t get Employment and Support Allowance if you’re also claiming either statutory sick pay, statutory maternity pay or job seeker’s allowance, but you can get it at the same time as claiming Universal Credit. Bear in mind, however, that it could reduce the amount you get from Universal Credit.

You can get up to £74 a week if you’re entitled to Employment and Support Allowance and you’ll be paid every two weeks into your bank or building society account.

To qualify for Employment and Support Allowance, you’ll either need to have worked as an employee or have been self-employed and you must have paid enough National Insurance contributions in the last two to three years to qualify.

People who need to claim Employment and Support Allowance because of coronavirus will not be required to produce a sick note.

You’ll usually have to have been unable to work for seven days to be paid if you’re claiming this benefit for the first time, but if you’re suffering from coronavirus or have to self-isolate it will be payable from day one.

Find out how to claim Employment and Support Allowance here.

If you’re already claiming benefits

Please don’t worry about your benefits being stopped if you can’t get to the job centre for your regular appointments. If you’re worried about attending an appointment you should call your local jobcentre and see if alternative arrangements can be made, such as a telephone appointment.

If you have to stay at home due to coronavirus, your compulsory work search and work availability requirements will be removed during this period. Similarly, if you’re unable to attend a reassessment for any of the benefits you receive, you’ll continue to receive these benefits until it’s possible to rearrange the reassessment.

Reclaiming overpaid income tax

If you’ve recently been made redundant, or have lost your job mid-way through the tax year, you could be eligible for a refund from the taxman. This is because income tax is calculated based off a forecast of earnings over the full tax year. If you lose your job before the end of the tax year, then you won’t have earned as much as HMRC expected you to originally – and hence you may well have overpaid income tax.

Everyone’s tax circumstances are different and there are a wide range of factors that will affect your tax bill each year, so you will need to check the situation that applies to you.

If you’re looking for more information on reclaiming overpaid income tax, you can read our comprehensive guide here.

Financial support if you’re self-employed and you've lost work due to coronavirus

The Self-Employment Income Support Scheme is designed to help those who work for themselves and have been financially affected by coronavirus. Only those who have filed a tax return for the 2018/19 are eligible for the scheme.

The scheme is comprised of four taxable grants, and the first two of these are now closed to applications. The third grant will provide 80% of your profits for November, December and January, up to a maximum of £7,500. You’ll only be able to claim this grant if your business sees reduced demand due to coronavirus between 1 November 2020 and 31 January 2021.

Details of the fourth grant have yet to be unveiled, but will only be able to be claimed by those financially hit by coronavirus between 1 February 2021 and 30 April 2021. You don’t need to have claimed the first or second grants to be eligible for subsequent grants.

When working out how much you’re entitled to, HMRC will look at your average monthly earnings over the past three tax years. If you haven’t filed tax returns for the last three years, the amount you receive will be based on the returns you have filed, even if you’ve only filed one.

Those who have only recently become self-employed won’t be covered by the scheme, as HMRC won’t have any records of their earnings yet. You also won’t be covered if you don’t earn enough to file a self-assessment tax return.

Self-employed people with average profits over £50,000 also won’t be able to claim financial support under the scheme.

Over the long term, the Chancellor has hinted that the 9% National Insurance Contributions (NICs) paid by the self-employed may in future rise to the same level as the 12% NICs paid by those who are employed. This is based on the fact that as they will essentially receive the same financial support as employees put on furlough during the current crisis, then they should contribute equally after the crisis resolves itself.

Find out more about the measures announced for the self-employed in our article ‘The Self-employment Income Support scheme explained’ or learn about the Self-Employment Income Support Scheme on the website here

Universal Credit for the self-employed

If you’ve been self-employed for more than a year, there is normally a ‘minimum income floor’ which is used to calculate how much Universal Credit you may be able to get on top of your earnings.

The Chancellor has confirmed that this minimum income floor has been suspended which should help more low earning, self-employed people affected by coronavirus access Universal Credit. He has also raised the payments for Universal Credit so that the self-employed can claim it at the same rate as Statutory Sick Pay (£94.25 a week).

Importantly the Government has also confirmed that money saved by the self-employed towards tax bills won’t be counted as savings and so won’t affect the amount of Universal Credit they can claim.

Delayed payment of tax

Most self-employed people who pay tax via the self-assessment system must make two tax payments each year to pay their annual tax bills, one by January 31 and one by July 31. These are known as ‘payments on account’.

This year, however, in order to provide people with a bit more financial breathing space, the Chancellor deferred the July payment, so that you’ll have until 31 January 2021 to pay your second payment on account.

Bounce Back loans and Business Interruption loans

Depending on your individual circumstances, if you run your own business you may be able to get a government-backed ‘Bounce Back’ loan for up to £50,000. You can apply for a loan between £2,000 and up to 25% of your turnover (up to a maximum of £50,000) if your business is based in the UK, was established before 1 March 2020 and has been adversely affected by coronavirus. The last date you can apply for a loan was 30 November, but this has now been extended to 31 January 2021. If you’ve already applied for a Bounce Back loan but didn’t borrow the full amount, you have until this date to ‘top up’ your loan if you need to.

Loans must be repaid, but you don’t have to pay anything back in the first year, and no interest is payable either. After the first year ends, interest is charged at 2.5% annually. Loans can last for up to 10 years, but you can pay back what you owe at any time without penalty. You can also take a payment holiday if you need to, or you can temporarily switch to interest-only payments up to three times for a period of up to six months each time. You can find out more about bounce back loans and how to apply here.

If you need to borrow more than £50,000, an alternative option may be a Business Interruption loan, which helps small and medium-sized businesses access loans and other types of finance up to £5m. This scheme is also open until 31 January 2021. To qualify, you’ll need to show that your business has been adversely impacted by the coronavirus. The government guarantees 80% of loans and also pays interest and fees for the first 12 months. Find out more about the Business Interruption Loan scheme and how to apply here.

Other financial support available

Additional measures have also been announced by the Government to help those who have lost their jobs or income in the way of additional benefits and payment holidays. We outline these below.

Support with mortgage payments

You may be able to get a mortgage payment holiday for up to three months from your lender if you think you’re going to struggle to make your monthly repayments. The deadline for requesting a payment holiday was originally 31 October, but following the government’s second lockdown announcement, the scheme has been extended. Borrowers now have up to 31 January 2021 to request a payment holiday.

Taking a break from paying your mortgage shouldn’t affect your actual credit score held at the credit bureaus such as Equifax and Experian. However, lenders will still be able to see that payments haven’t been made and may still be more nervous about lending to you in the future. So whilst a payment holiday might provide essential breathing room, it isn’t something that should be entered into lightly.

Find out more about how mortgage payment holidays work in our article Everything you need to know about taking a mortgage payment holiday or check out our handy mortgage payment calculator here.

Loan and credit card payment holidays

If you have a credit card or loan, you should be able to ask your lender for a payment holiday of up to six months..

You’ll need to get in touch with your lender, usually by phone, although some will allow you to ask for a payment holiday online. Bear in mind that lenders are dealing with large numbers of enquiries, so you may need to be patient. It’s also important to remember that interest will continue to build up on the balance you owe, so whilst it might provide some essential breathing space, taking a payment holiday from your loans or credit cards can be one of the more expensive ways of reducing your monthly outgoings.

Just like with mortgage payment holidays, whilst agreed payment holidays should not affect your credit score, they will still be visible to lenders and so may make it harder to borrow again in future.

Energy bills

If you don’t think you’re going to be able to afford to pay your energy bills over the next few months, contact your energy provider and see if they can defer your payments temporarily.

If you have a pre-payment meter and are unable to top it up either because you are ill with coronavirus or have to self-isolate you may be able to get a top-up card or key with credit on it posted to your home. Get in touch with your supplier as soon as possible so that they can send one out to you.

It also might be worth checking in with your energy provider to see if you have a credit balance built up on your account. If you do, you can ask them to refund it into your bank account which could be particularly helpful during these difficult times.

You may also want to review your energy tariff to see if you can make savings by switching supplier using our energy comparison tool. Over half of Rest Less users (51%) who have switched using the tool have cut energy costs by an average of £167 a year, and one in 10 have saved £340 a year

Water bills

Most water companies are offering support to customers who are having problems paying their water bills.

Options may include moving to a capped tariff where your payments won’t exceed a certain amount, or taking a payment holiday so that you can take a break from payments until you’re able to get back on track, or your provider might agree to lower your bills temporarily.

What you’ll be offered will depend on your individual situation, so get in touch with your supplier and see what help they can provide you with.

Council tax

If you don’t think you’ll be able to afford to pay your council tax because you’re now on a low income or claiming benefits, you might be eligible for a council tax reduction which could reduce your bill by up to 100%. What you get will depend on where you live, your circumstances, your household income and whether your children live with you. You can apply for a council tax reduction here.

If you don’t qualify for a reduction, it’s worth asking your council whether you might be able to take a break from payments for a month or two. Some councils have promised that they won’t penalise people if they don’t pay on time during this period. Contact your local council to find out what help they can provide – you can find their contact details here

Where to go for more information

There are several charities and organisations which can advise you about any benefits you might be entitled to and can help you submit a claim.

These include Turn2us, which can assess your eligibility for benefits through its Turn2us benefits calculator or by phone on 0808 802 2000. The site also has a free benefits calculator which you can use to see what you qualify for.

Alternatively, you can get help from Citizens Advice. You can contact the Citizens Advice consumer helpline on 0808 223 1133.

And finally...

This is an incredibly difficult time for everyone as we battle not only a health crisis, but also increasingly an economic one. To try and help, we have pulled together a range of guides to support our members, from ideas to boost your income and raise emergency cash through to ways to cut costs and how to get help with your bills.

Are you worried about whether you’ll have enough financial support, or have you recently made a benefits claim for the first time? If so, we’d be interested in hearing from you – you can leave a comment in the box below or join the money conversation on the Rest Less community. Stay safe and look after yourselves.

Links with an * by them are affiliate links which help Rest Less stay free to use as they can result in a payment or benefit to us. You can read more on how we make money here.


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