Coronavirus and finances go hand-in-hand: it’s had a massive economic impact in every household. We wrote the Coronavirus Big Guide back in March 2020, when the news was all about the start of lockdown and the pandemic. Now, we’re in the second phase of lockdown – which means lots of original rules and schemes have changed.
Here’s the updated guide to coronavirus and finances, to help you navigate the next few months.
- Flexible furlough
- Self-employed income support scheme
- Shielding rights
- Sick pay
- Can your business reopen?
- Flexible working rights
- Parents and work
- Weddings and funerals
- Mortgage and payment freezes
- International holidays
- Ask your questions
- More useful tips
To phase out the Coronavirus Job Retention Scheme (JRS), the Chancellor announced the introduction of flexible furlough, to start from 1st July 2020. This means companies can ask staff to return to work on part-time hours – and the rest of their time is made up from the furlough scheme.
You’ll not dip below the 80% wage you’ve been on in the first few months of the JRS. Instead, you could take home MORE money than before! That’s because your employer has to pay you the full wage for hours actually worked. So, you could receive 2 days’ full pay and 3 days’ 80% furlough pay per week, as an example.
Who can be put on flexible furlough?
You must have been put on at least three weeks’ furlough by 10th June 2020. Anyone who was not furloughed by that date cannot be furloughed on the new phase of the scheme. The only exception is for parents who were on maternity or paternity leave during the initial furlough period. They can be furloughed after 10th June.
Employers can’t go over the maximum number of employees furloughed at any one time in the initial March – June period. Some companies operated a rotating furlough scheme, with a three weeks on/ three weeks off rotation. This means that, even if the company had 500 employees furloughed throughout the period, if the maximum furloughed at any one time was only 250, the company can only claim furlough for up to 250 employees.
No more minimum furlough
Previously, anyone put on furlough legally had to be off work for three weeks at a minimum. From 1st July, the minimum furlough period no longer applies. This allows businesses to take advantage of the part-time furlough on offer, without having to keep staff off for three weeks each time. However, you must be furloughed for a minimum total of 7 days within a pay period (i.e., the month) for your company to claim furlough costs. They don’t have to be consecutive days, just 7 days within your pay period. For weekly-paid workers, this means it’s likely you’ll work one week on/one week off or a similar rota.
Employers must start contributing towards furloughed staff costs from August 2020. At first, it’s just National Insurance and pension contributions they’ll need to pay. From September, they must pay at least 10% of wages, plus NI and pension contributions. In October, they must pay 20%, with the Government support dropping to 60%.
You’ll not notice a difference in your take-home pay. You’ll still get 80% – it’ll just be paid in different proportions from your employer and the Government. On October 31st 2020, the scheme ends and employers must return to full responsibility and contractual pay from 1st November 2020.
One of the most controversial schemes in the coronavirus financial support offerings is the Self-Employed Income Support Scheme. We have full original details of it here, but now it’s been extended.
Unfortunately, it looks like HMRC have miscalculated the ‘three month grant’ of the first SEISS grant. It is supposed to cover March, April, and May’s income. However, the second SEISS grant scheme doesn’t open until 17th August – and covers from 14th July 2020, August, and September. This means two weeks of July and the whole of June is missing from the scheme! This may be because the Chancellor allowed self-employed workers to continue working when claiming through the scheme. However, it’s one example of how the scheme misses the mark for many self-employed who have not been able to carry on working (such as actors, TV production crew, and musicians).
What the second grant looks like
The second grant is smaller than the first. The original SEISS grant was for 80% of the average monthly earnings of the past three years’ reported profits. HMRC took the tax returns for 2016/17, 2017/18, and 2018/19 to work out profits. This was divided to find the monthly average, and multiplied by three to give three months’ worth of the average earnings. However, 20% was knocked off this figure to match the 80% furlough pay of PAYE employees.
So, the second SEISS grant scheme will also be in the same line as the PAYE furlough scheme, which reduces to 70% from September. Again, there are some discrepancies in HMRC’s calculations of bringing the self-employed scheme ‘into line’ with the PAYE scheme, as furloughed employees won’t see any reduction to their furlough pay (it’s an employer-based contribution that changes), and the reduction of Government support doesn’t kick in until September (not August).
Are you eligible for the SEISS?
The eligibility for the second SEISS grant is, unfortunately, the same criteria as the first grant. This means the newly self-employed (anyone with only a 2019/20 tax return, or who started a business since April 2020) won’t qualify.
- Have average 3-yearly profits below £50,000.01
- Have submitted at least a 2018/19 tax return
- Be trading since the 2019/20 tax year
- You’ve suffered a loss of income due to coronavirus
- You intend to trade in the 2020/21 tax year and beyond
- Have suffered a direct loss of income due to coronavirus since 14th July 2020
If you haven’t yet applied for the first SEISS grant, and think you’re eligible, do it now! It closes on 13th July 2020, so you won’t be able to backdate any claims for the grant after that date – you’ll only get the smaller second grant. The second scheme opens on 17th August 2020 and closes for applications 19th October 2020.
You MUST make the claim yourself here. You can’t get your tax advisor or accountant to do it for you – it’ll trigger a fraud alert which will delay your claim.
Directors of Limited companies cannot apply for the scheme, though they may be able to apply to furlough themselves if they have already furloughed themselves at least once before 10th June 2020.
The newly self-employed, and those operating at a loss in their first couple of years, or those set up in the 2019/20 tax year, are all excluded from the scheme. PAYE freelancers, too, such as those working short contracts in television and film for the BBC, are excluded.
These people, and many left behind in the furlough scheme, aren’t eligible for any Government support. If you fall into one of these categories, take a look at Excluded UK, a campaigning alliance for all those excluded from financial assistance.
If you’ve been shielding because the Government wrote to you in March, this has ended. You may be eligible for sick pay, or – if you were on furlough before 10th June 2020 – you can continue to remain on furlough pay.
There is no further support for those shielding, so things like food boxes that were delivered by the Government are no longer an active scheme. You will still get priority on supermarket home deliveries, though.
Returning to work
This leave many people in the lurch. They aren’t well enough to return to a busy workplace – or travel on public transport – but employers can insist they return to work.
If your workplace isn’t taking suitable steps to protect your health and safety, you have a right not to attend work. You can’t be dismissed for this, if you’re following all legal and employer processes to raise a health and safety complaint. You MUST write to your employer though. Otherwise, you CAN be dismissed as it counts as an unauthorised absence.
However, you may not receive all or some of your pay during the time you’re not working. However, because you feel your employer is not taking suitable health and safety precautions, this could be deemed a breach of contract. In this instance, you can negotiate paid leave until steps are in place to make the workplace safe. Again, you cannot be dismissed for raising this issue.
Try to negotiate a way to work from home wherever possible. This could mean you change roles – for example, going from a customer-facing role to an administrative one – to keep you in work.
If your company cannot change your role for home working, and you aren’t well enough to go into work, they could make you redundant. If they do this, they MUST follow all legal processes to file a medical redundancy. When you’re made redundant, you can immediately claim Universal Credit and potentially other benefits such as Personal Independence Payment (PIP). Those too ill to work may qualify for the Low Capability for Work and Work Related Activity group in Universal Credit (following a health assessment). This adds extra money to your UC payment and may mean you’re eligible for other benefits like PIP.
During the height of the pandemic, the Government confirmed it would repay the bill for all Statutory Sick Pay up to 14 days per employee for small businesses (up to 250 employees). Those shielding, self-isolating, or sick due to coronavirus will have their SSP paid by the Government. If you’re off sick for any other reason, you’re still entitled to SSP (your employer has to foot some or all of the bill, but you’ll still get the same allowance).
SSP is £95.85 a week and is paid up to 28 weeks in any working year. Only the first 14 days will be covered by the Government in some circumstances; otherwise, employers must pay SSP themselves. For companies that are already on tight purse strings, they may discuss extending your furlough (if you’ve previously been furloughed). Or, they could discuss medical redundancy with you if you’re unwell for an extended period of time.
Both self-employed business owners and employees are all wondering the same thing: can the company re-open its doors?
Some businesses are a definite no-go for the time being. Swimming pools, gyms, and theatres are unlikely to open for a while yet. However, many others are a ‘maybe’. The Government has relaxed lockdown rules to make social distancing “1 metre plus” to allow more businesses to reopen in England. Scotland, Wales, and Northern Ireland have yet to announce similar changes.
For other businesses, it’s less a question of ‘can’ and more about whether they ‘should’ reopen. Many can’t operate safely even with social distancing rules, such as nail salons, so opening up might bring extra (and expensive) challenges. Other businesses, such as all retailers and pubs and bars, can reopen according to the guidelines.
It’s worth noting that the Government’s relaxation of lockdown rules in England are ‘guidelines’ and not legislation. This means it’s up to business owners to decide if they can operate safely – so even if you, the employee, doesn’t think they can, if they reopen they’re allowed to ask you to return to work.
You have the right to ask your employer to introduce flexible working options. For example, if you have been working from home during the pandemic, you may want to continue working from home a few days a week (or permanently).
Your employer doesn’t have to grant this request, but you do have a legal right to ask. So, you can’t be disciplined for making the request.
With schools not fully open until September 2020, parents going back to work face a dilemma. Pay for childcare – and reduce income – or find a way to stay at home? Some will be able to work from home at least some days each week, to reduce the childcare bill. However, many won’t have this option.
You have the right to request parental leave if your child is sick. If your child is showing symptoms of coronavirus, you’ve got to self-isolate (and qualify for SSP during those two weeks). Your employer must try to work out reasonable adaptations to help you provide childcare for your children. If you’re a key worker, your child can attend school (whatever age or grade they’re in).
Funerals were never banned during the height of the pandemic, but were severely restricted due to the 2-metre rule. Only close family members could attend in most cases, too. Weddings were completely banned for several months.
From 4th July 2020, it’s anticipated that weddings for up to 30 people can take place. The assumption, then, is a similar ruling for funerals will follow suit. The guidance hasn’t yet been released – which is very frustrating for those with an early July wedding booked!
If you need to cancel your wedding because you’re ill due to coronavirus, your wedding insurance should pay out. However, once weddings are legally permitted again, it will get much harder to cancel and make a claim.
Many people have been faced with a postponement bill, too. If you’ve been asked to re-register for your wedding, because your wedding date fell during the ban, you shouldn’t have to pay to re-register. Some registry offices are sending bills to those who have moved their wedding date to next year, to pay another registry fee, but you can fight this with relative ease.
Mortgage holidays have been extended to 31st October 2020, to fall in line with the end of the furlough scheme. Applications for mortgage holidays are open until 31st October 2020; if you already have a mortgage holiday in place, it can be extended by three months from the original end date.
Unlike mortgages, other payment freezes become discretionary from July 2020. The FCA has indicated it expects lenders to act with forbearance and try to work with customers to arrange payment holidays without detriment wherever possible. However, protection to your credit score won’t apply any more. So, if you’re thinking of taking a payment holiday to relieve your cash flow, consider at least reduced payments rather than total non-payment. This reduces the interest that accrues, too.
At the moment, you may not face quarantine when arriving in another country – but you will have to isolate for 14 days when returning to the UK.
Many tour operators have started to advertise flights and holidays for late July and August. You CAN book for these times, though be prepared to file for a refund. Anywhere that the Foreign Office deems for ‘essential travel only’ requires a refund or credit note from the tour operator. Don’t take the credit note: take the refund. Many holidayers have reported that they’ve only been offered credit notes – but you’re legally entitled to a cash refund if the tour operator (or airline, or hotel) cancels your booking from their side.
Others have found they’ve taken a credit note to rebook the holiday for next year – but have faced a massive price increase that they have to pay the difference on. Unfortunately, once you have a credit note you can’t then request a refund instead.
You could snag a really cheap bargain last-minute holiday – IF you’re prepared to be flexible and book at the latest opportunity possible. However, do bear in mind the 14-day quarantine when you return to the UK. Those who work from home won’t be affected by this – but anyone required to attend their workplace won’t be eligible for sick pay during this 14-day period (unless you are legitimately ill).
Try a staycation
This will be the Summer of Staycations! From camping to city breaks, lots of people will make the most of what the UK has to offer on their doorstep. Check out our cheap staycation ideas article to be inspired!
With so many changes constantly going on at the moment, it’s hard to keep up. Luckily, there’s loads of help over on our Magpie Messageboard! Ask your questions to get answers from vetted experts, the Magpie team, and others in similar circumstances to you. It’s a great community with lots of advice and tips, so join in the conversation.
As well as the Magpie Messageboard, there’s lots of help around the website, too. Check out these articles for more advice on saving money after COVID-19, cheap holidays, and boosting your income.
- How to have a cheap holiday in the UK
- First steps to tackling debt in a post-COVID-19 world
- Benefits for the over 60s
- 11 Tips for coping with redundancy at 50+
- Redundancy: your action plan
- Benefits and funding for the newly self-employed
- Cash flow management tips for the self-employed
- Gifting money: what you can (and can’t) do
- The best standalone savings apps in 2020