Coronavirus and your money

If you have to take time off work because of coronavirus there are a number of support measures in place

If you are facing a drop in income because your employer has had to temporarily lay you off or put you on short-time working the government has said it will cover up to 80 percent of employees salaries through grants to businesses and a range of changes to the benefits system.

If you’re self-employed, the income support scheme might cover up to 80 percent of your profit based on previous tax returns for three months. But it’s likely you will have to wait a while for this money if you’re eligible.

Find out more about what support might be available to you and changes to the benefits system in our guide coronavirus – what it means for you.

If you have to take time off work because you’re ill you may find yourself needing to rely on Statutory Sick Pay (SSP), Universal Credit or Employment and Support Allowance, which is likely to be considerably less money than you’re usually used to living on at the moment.

And if you’re self-employed or working in the gig economy you might have to claim Jobseeker’s Allowance or Universal Credit if your work stops and you’re living on a reduced income.

Whatever your circumstances, it’s going to be an incredibly stressful period, because although this is a health-based emergency, it’s also a financial-based emergency too.

The more you can do now to plan ahead will save you time and energy – and importantly, money– when you might not be feeling at your best.

Things you can do right now

Important

If you’re struggling with problem debt you can find free debt advice near you with our Debt Advice Locator.

First, check out our guide coronavirus, your rights and entitlements , to make sure you get everything you’re entitled to. The guide gives details of what support you might be able to claim now if you’re employed, self-employed or a gig economy worker.

If it’s possible, you need to put aside some money for if you can’t work to top up any drop in income. You’ll also need to look at what outgoings you have and work out the best ways to fund them in the short term. Follow these steps first.

Step 1 Do an emergency budget

Join our Facebook group, Coronavirus and your Money for money news and updates as soon as we get them, as well as a place to ask money questions, share worries and help others out.

If you’re worried about cashflow have a look at what you’re spending and what income you have coming in. You may need to cut back on as much as possible to get you through the next few weeks. It’s not going to be fun, but you’ll be pleased you did once it’s all over.

You can also use this time to think about longer-term savings using our Budget Planner tool or look at ways to cut the cost of your household bills such as switching providers for your gas, electricity or mobile phone contracts.

Step 2 Check your insurance policies

Check whether you have insurance policies that would cover your mortgage payments or replace some of your income. For example:

  • Payment protection insurance
  • Mortgage payment protection insurance
  • Accident, sickness and unemployment insurance

These types of insurance are often offered with life insurance policies or mortgages and it’s easy to forget you have cover.

There is usually a minimum time period, which could be several months, before these policies pay out, so you should talk to your insurer to find out more, particularly if you are worried about redundancy.

Step 3 Use your savings

Do you have some savings you can rely on? Don’t assume you can’t get your money if it’s in a fixed term or notice savings account. Some banks and building societies are now saying you’ll be able to access them with no penalties. Check with your bank or building society if they’re able to help.

Step 4 Talk to your creditors if you think you’re going to miss payments

Once you’ve done your budget if you think you’re going to struggle to pay essential bills make sure you talk to the people you owe money to before it becomes a problem.

Problems paying your rent or mortgage

Something that is going to be hard to cover if you’ve got a sudden drop in income and don’t have access to savings is your mortgage or rent payments.

If you have a mortgage

Mortgage lenders have announced support if you have to take time off work because of coronavirus, including a repayment holiday of up to three months. This includes buy-to-let mortgages.

Discover the things you need to think about before taking a mortgage payment holiday.

This is helpful although it appears decisions to offer this support will be made on a case-by-case basis. Therefore the most important thing is to talk to your lender immediately to discuss your options if you think you could miss a payment.

Some banks, building societies and lenders have already announced what they will be doing to help people affected by coronavirus:

Our guide Mortgage arrears and problems paying your mortgage can help you think things through and give you the heads up on what to ask your lender.

If you’re renting

The government has announced emergency legislation to suspend new evictions from social or private rented accommodation during the coronavirus crisis.

Your landlord will not be able to apply to the court to start possession proceedings until you have missed rent payments for at least three months.

If you’re living in a buy-to-let property, your landlord will be able to apply for the three-month mortgage payment holiday if you are experiencing financial difficulty so they shouldn’t put any pressure on you to meet rent payments during this time.

If you’re still unable to meet rent payments after three months, your landlord should take every step to ensure that you continue to stay in your home. They will be expected to take into account your financial circumstances and try and work an affordable repayment plan with you before they start any proceedings.

If you’re a social housing tenant, talk to your tenancy support officer or housing officer who will be able to support you and work out an affordable repayment plan.

If you’re on Universal Credit and usually pay the rent yourself, talk to your work coach about what they can do to support you to keep rent payments on track.

Our guide Rent arrears and problems paying your rent can help you think about what to say to your landlord.
You can find more information about help for renters on the Shelter website.

In Scotland, legislation will be brought into stop evictions for both private and social tenants for up to six months. There will also be no evictions of housing association tenants facing financial hardship because of coronavirus.

Find out more on the Shelter Scotland website.

If you’re worried about paying your Council Tax

Council Tax payments (Rates in Northern Ireland) will be due again from April and bills have gone up since last year. Lots of people don’t realise Council Tax is a priority debt. If you miss payments it can quickly become a serious problem.

We think councils will change their approach in light of the coronavirus and we will update you when we know more. But as it stands if you miss a payment your council will write to you after 14 days and ask you to pay what you owe within seven days. If you do this, you can carry on paying in monthly instalments as normal. If you don’t pay, most councils will ask you for the full year’s outstanding amount in one go.

If you think you won’t be able to pay your Council Tax, make sure you tell your local council before you miss a payment. They will be able to help you if they know, particularly if it is because of coronavirus.

Council Tax Reduction

If you’re claiming Universal Credit or you’re now on a very low income, you might be able to get some help towards paying your Council Tax.

Each local council has its own Local Council Tax Reduction scheme, so you will need to apply to them directly.

Most councils won’t backdate payments. So if you’re claiming Universal Credit for the first time, don’t waste any time. Make sure you apply for a reduction as soon as you’ve made your claim.

You can apply to your local council for Local Council Tax Reduction on Gov.uk.

If you’re buying, selling or moving house

The government is urging people not to move house while restrictions are in place. Under most circumstances, homebuyers and renters looking to move into a new property should delay moving.

Renters and landlords

If you’re a renter looking to move into a new property, or a landlord looking to rent out a property, you should delay these plans until after the restrictions are lifted.

If you’re a landlord, you can take advantage of the three-month mortgage payment holiday if you’re going to struggle to make mortgage repayments on your buy-to-let property.

If you’re currently renting and were looking to move to a new property, speak to your current landlord to see if you can extend your tenancy.

If you’ve already agreed the sale

If you’ve already agreed a sale there is no need to pull out of the transaction.

If the property you’re moving into is vacant, then you can still go ahead, but you should follow the government guidelines to avoid contact with other people to minimise the spread of coronavirus.

If the property is already occupied, then all parties should work together to postpone the date until after the restrictions are lifted.

UK Finance has announced all mortgage lenders are working with customers to extend mortgage offers by up to three months to allow them to move in at a later date.

Lenders will also work with you if your circumstances change during these three months, or the terms of the house purchase change significantly.

If moving home is unavoidable, you are encouraged to stay away from others to minimise the spread of coronavirus.

If your house is on the market

If your house is already on the market, you can continue to advertise it. But, as per government guidelines on social distancing, you will not be able to conduct in person viewings. If you’re using an estate agent, they might be able to offer virtual tours.

You can still accept offers on your property. However, the sale might take longer and you are encouraged to not move home at the time.

If you want to sell your home

If your home is not yet on the market, you will probably have to wait. Restrictions on movement mean it will be difficult to safely deal with estate agents, viewers, surveyors and other people involved.

Find more advice about buying, selling and moving home on the Gov.uk website.

If you think you might not be able to pay gas or electricity bills

If you’re going to have trouble paying your gas or electricity bill, dig out a recent copy of your bill for details of the number to call to talk to your provider. They will be able to tell you about ways you can make affordable repayments and they should also check if you’re on the best tariff for your needs. It’s also possible to switch providers even if you’re in arrears to get a better tariff.

Whatever your situation, now is a good time to think about switching as you could get a better deal with another energy company.

Read our guide How to save money on gas and electricity bills to find out more.

If you have a prepayment meter, you will receive help if you’re not able to top it up.

This will include credit being sent though the post, money being automatically added to your meter and companies sending people out on your behalf to top your meter up.

If you’re struggling to pay your bill, you will receive support and no meter disconnections will take place.

Find out more about what you can do if you have problems with topping up your prepayment meter on the Citizens Advice website.

Help with water bills

Water companies in England and Wales have put extra support in place if you’re worried about paying your water bill because you’ve lost your job or had your income cut because of coronavirus.

Support will depend on your circumstances and includes:

  • payment breaks or payment holidays
  • special schemes, such as social tariffs
  • adjusting your payment plan to cope with a drop in household finances
  • offering advice on benefits and managing debts, particularly if you have not been in financial difficulties before
  • stopping new court applications on unpaid bills during the current restrictions and stopping any enforcement action.

The water companies will also be offering different ways to pay your bill if you’re unable to leave the house because you’re self-isolating.

To find out what your supplier can offer, get in touch as soon as you can and before you’ve missed a payment. Contact details and further information will be on their website or on your bill.

What to do if you’re getting behind on car finance payments

Over nine in ten of us now pay for our vehicles on Personal Contract Purchase (PCP) agreements. If you’re going to struggle to meet your repayments because of coronavirus, talk to the car finance company as soon as you can.

They might offer to extend the cost of the contract which would lower your monthly payments or come to another arrangement to help you out.

For more information on what to do if you want to end a lease agreement early read our guide on Cutting car finance costs.

If you are worried about debt

Facing a sudden drop in income if you’re already juggling other debts can have a severe impact on your finances and is probably the last thing you need right now. You may have been managing to make repayments on money you owe but this crisis is going to push you into problem debt.

Although there may be a lot going on in your life that makes it easy to ignore debt, the sooner you get help the sooner you can get back on track.

There is lots of free, confidential debt advice out there to support you and you don’t have to face the problem alone. Talking to someone can mean one less problem off your mind.

Use our debt advice locator tool to help you find advice in a way that’s best for you: face-to-face, online or over the phone.

If you think you might have to borrow money

If you don’t have any savings and are facing an emergency cash shortfall, borrowing may feel like your only option.

Try and use borrowing as a last resort and if you need to borrow, make sure you choose the right type of credit or loan for your situation. Otherwise, you could find yourself paying more than you need to.

Shop around and compare deals, looking at:

  • the interest rate and the Annual Percentage Rate (APR)
  • how much you will repay in total and whether you can afford the repayments
  • any penalties for missed or late payments
  • the cost per week or month and whether this might vary.

Borrowing from family and friends

If you’re able to borrow some money from family or friends who can lend you the extra cash, this could be a cheap way of getting extra money without resorting to Payday lenders or other types of high cost credit. They are also likely be more flexible about how you pay the money back.

Hopefully this will be a quick and easy short-term arrangement but you might want to read our guide Borrowing money from family and friends to make sure there are no arguments further down the line, especially if they get sick and need the money back in a hurry.

Overdrafts, personal loans and credit cards

An overdraft can be a quick way to fund a short-term gap in your income. However, there are changes due to come in from April that could make using an overdraft much more expensive if you plan to use it for more than just a few days.

Not all the banks have announced what their overdraft charges are going to be but those that have say their APRs are likely to be around 40%.

If you’re thinking of using your overdraft facility, check with your bank to find out what they are planning to do, particularly in the light of coronavirus crisis, and make sure you’re aware of how much it’s likely to cost you.

If you’ve got a good credit rating and you’ll be able to afford the repayments, maybe a small personal loan or a 0% credit card might be a cheaper alternative to cover essential expenses than an overdraft.

Do some research now on comparison sites for best rate personal loans and credit cards so if you need to apply in a hurry you’ve already done your homework and know who’s offering the best rates.

Payday loans

If you’re only going to have to cope with a drop in income for a couple of weeks a payday loan could seem like a really quick fix to help you until you’re back at work again.

However, there are a number of traps you could fall into with payday loans if you don’t know what you’re letting yourself in for.

Before you sign up for any payday loan, we strongly recommend you read our guide Payday loans – what you need to know.

Other types of borrowing

Credit unions

Loans from credit unions are much cheaper than from other lenders and you can pay the money back at a rate you can afford.

Find out more about borrowing from credit unions.

Responsible Finance

If you’ve been turned down for credit by high street lenders, then you can look at fair finance providers. Their interest rates are lower than high-cost credit providers but higher than a credit union. Repayments are based on an affordability assessment which ensures the borrower can keep up with the repayments.

Find a fair finance provider in your area on the Responsible Finance website.

Pawnbrokers

Pawnbrokers are another option where you leave something valuable, such as jewellery, as security for a loan. The rate of interest you will be charged is normally lower than a high street bank and it’s unlikely you will get the full value of the item, but you will get a quick decision.

High cost credit – things to think about

If your credit rating isn’t so great, cheaper borrowing may not be an option for you and you may be tempted by other forms of high cost credit, such as logbook loans or doorstep loans to see you through the crisis.

These forms of credit can work out to be very expensive and you need to think very carefully before you decide to borrow in this way. Before you make a decision read our guides.

Avoid loan sharks

Loan sharks are illegal lenders who often target people who are desperate and who can’t get mainstream credit. They might seem friendly at first but borrowing from them is never a good idea – even if you feel you have no other options.

Before you take out any credit or loan, take a look at our Help with loans section.

If you might need to claim Universal Credit

If you’re not entitled to SSP or new style Employment and Support Allowance, you’ll may be entitled to claim Universal Credit if you need support while you’re off work because of coronavirus.

Universal Credit is based on household income and savings. If either you or your partner or spouse have savings of £16,000 or more you won’t be able to claim Universal Credit. If you have savings of between £6,000 and £16,000, the amount you get will be reduced.

If you qualify to claim Universal Credit you will need a lot of paperwork evidence to make a claim and you’ll have to make your claim online.

It also takes five weeks for your first Universal Credit payment to come through so any delays could push the payment back further.

You don’t want to be hunting around for payslips, tenancy agreements or mortgage statements when you have a fever and are trying to make a claim. Take this opportunity to gather together all your important paperwork now, because future you are going to massively appreciate it.

Our guides can help you prepare.

The Citizens Advice Help to Claim Service

If you’re worried about anything to do with claiming Universal Credit, contact the Citizens Advice Help to Claim Service online or over the phone. Citizens Advice Scotland also run a service if you’re north of the border.

They can answer any question you’ve got about Universal Credit in complete confidence. And if you need it, they can also support you right through to getting your first payment as well as helping you claim for an advance payment to tide you over until you get paid or support you to claim online.

It’s especially important to talk to them if need to make a claim for UC and are already getting Housing Benefit, Income Support or Tax Credits as they will be affected by your Universal Credit claim.

Find out more about the Help to Claim Service on the Citizens Advice website.

Travel plans and travel insurance

The Foreign and Commonwealth Office (FCO) is currently advising against all travel and all but essential travel to certain places, which have been greatly affected by coronavirus.

Get up to date information about travel advice from the Foreign Office on the Gov.uk website.

Many insurers are limiting or changing cover on existing single and multi-trip policies for claims relating to coronavirus.

It is important you contact your insurer to find out how coronavirus is going to affect your policy.

If the country you’re planning to travel to is not subject to a travel ban, your travel insurance policy will not cover you if you decide to not travel for reasons not covered in your insurance policy.

You should check your travel insurance policy or with your insurer to find out what are valid reasons for cancelling a trip.

Some insurers have suspended sales of new insurance policies. Others have said new policies with not cover any claims relating to coronavirus.

You should check directly with any potential insurers to find out how coronavirus affects your policy.

What if my airline, travel agent or cruise company cancels my trip?

If your airline or cruise company has cancelled your trip because of coronavirus, you should be able to claim a refund, rebook with another carrier, or rearrange your travel plans. If this happens you should check with the company directly to find out your options.

If you have travel insurance, you should check your policy or with your insurer to find out if you might be able to make a claim for other costs associated with your trip.

What if my airline goes bust?

Unless you booked your trip as part of a package holiday, the airline you were supposed to fly with going bust is not ATOL protected. But, you might still be able to claim under Section 75 of the Consumer Credit Act if you bought the tickets using a credit card.

You might be able to claim through your travel insurance, but you should check with your insurer.

Does my ATOL protection give me any cover?

No, ATOL protection is designed to help you if your travel agent goes out of business.

If you’re going abroad or have a trip planned it’s important to know how coronavirus might affect your travel plans and your travel insurance.

This depends on where you’re going to, advice from the Foreign and Commonwealth Office (FCO) or if your airline or travel agent cancels your flight.

If you’re worried about redundancy

No-one knows how long this crisis will continue. If you’re worried that you might be made redundant our Redundancy Handbook can help you prepare.

Coronavirus scams

Fraudsters are using the coronavirus outbreak to scam people out of money. This has included people attempting to buy protective face masks from fraudulent sellers and coronavirus-themed phishing emails.

Here’s a round up of some of the scams we’ve heard about so far.

Email and door-to-door scammers claiming to be from research companies connected to organisations like the Centre for Disease Control (CDC) and the World Health Organisation (WHO) offering coronavirus tests, or details of those who have been infected.

People being encouraged to invest money in the stockmarket as share prices have fallen a lot in recent weeks. The scammers will often tell you this is low risk, high reward, which is a tell-tale sign of a scam. Be very careful of anyone who contacts you out of the blue with a too-good-to be true investment proposition.

Emails appearing to be from the government offering money to help you through this difficult time and messages from HMRC offering you tax rebates.

Government grants, particularly the self employed income support scheme, are likely to be targeted by scammers. If you’re self-employed, this scheme is not open yet, so any contact you have from someone claiming to be from HMRC offering you access is a scam.

Many scammers are taking advantage of the fact it is harder to get in contact with providers because shops are closed, and helplines are very busy. Be suspicious if you get a text message, email or phone call saying there is an issue with your payment or bill.

Scammers have also been contacting people pretending to be from banks offering financial help like no late fees on credit cards and payment holidays on loans, as a way of getting you to reveal your card and bank account details.

The number of scams is only likely to increase and Action Fraud is reporting hundreds of thousands of pounds being lost to scammers since the outbreak began.

It’s important you remain extra vigilant at all times, make sure any calls and emails you’re getting are from legitimate sources and don’t give out any personal information.

Find out more about how to spot, avoid and report scams.
Learn more about coronavirus scams on the Action Fraud website.

If you’re worried about your pension

Since the coronavirus outbreak, stock markets have fallen considerably and are likely to remain volatile for a while. You may therefore be wondering if you should bring forward a decision to do something with your pension.

Please note that the following information relates to pensions held in defined contribution arrangements. If your pension is held in a defined benefit arrangement, then any investment risk is borne by the sponsoring employer. The state pensionopens in new window is unaffected by fluctuations to the stock market.

If you’re currently paying into a workplace pension and have several years before you’re planning to draw on your pension, then you’re probably going to be ok. In time, it’s likely markets will recover, and it might even be a good time to consider increasing your pension contributions if you can.

If you’re close to or considering retirement, many pension schemes will have seen their funds life styled. This means your pension will have been moved into predominantly less risky funds such as Cash, Gilts or Bonds. That doesn’t mean your pension won’t have taken a hit, but it should be considerably less than if you had remained invested in shares. However not all pension schemes offer this automatic life styling so you may want to check what type of funds your pension is invested in.

If your pension is still invested mostly in shares, don’t panic. In time markets are likely to recover although depending on when you are planning to retire, you may have to consider taking a lower income or retiring later.

Find out more about choosing a financial adviser.

Pension release and pension unlocking

If you’re under the age of 55 and struggling for cash because of the coronavirus crisis, you may be tempted to cash in your pension.

Be aware that if you release or unlock money from your pension pot, your pension provider will notify HMRC and you will have to pay a 55 percent tax bill on the money you take out on top of fees to the companies offering this service.

These firms are not regulated by the FCA and while doing this is not illegal, it’s not advisable to take money out of your pension pot unless you’re covered under some very specific circumstances.

Find out more in our guide to pension release and pension unlocking.

Accessing your state pension

If you’ve been told to self-isolate and can’t get to the Post Office to collect your pension, The Post Office say you’ll need to nominate a helper to pick it up for you. They’re known as a permanent agent.

Once you’ve nominated a helper, they’ll have full access to your account through their own card and PIN so make sure you choose someone you trust completely.

To get this set up call the Post Office card helpline on 03457 22 33 44, or ask someone to pick up the P6163 form from the Post Office.

Talk to us

You can also use our free, confidential Pension Wise service for information on your retirement options or talk to one of our pension experts at The Pensions Advisory Service about any other pension query.

  • The Pensions Advisory Service: 0800 011 3797
  • Pension Wise: 0800 138 3944

Our money guidance experts are also here to talk you through any money problem however big or small. You can contact us by phone, online or WhatsApp for free confidential help.

  • Telephone: 0800 138 7777
  • Typetalk: 18001 0800 915 4622

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