Learn to navigate the bewildering world of the benefits system...
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 the website turn2us.org.uk, which has a 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-bycase 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 threemonth 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 onemonth 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 at england.shelter.org.uk/housing_ advice/coronavirus.
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 at gov.uk/difficulties-paying-hmrc 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 (british-business-bank. co.uk/ourpartners/coronavirusbusiness-interruption-loan-schemes/ bounce-back-loans).
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 at ism.org, and a list for freelance artists and actors at ukcovid19 freelanceartistresource. wordpress.com.
For those looking for grants available in the hospitality industry, check out hospitalityaction.org.uk.