During these difficult times, many people are worried about losing their jobs and not being able to maintain their mortgage, rent, credit card and other financial commitments.
This guide looks at how your finances may be affected and the help that’s available to get you through these troublesome times.
As the current situation changes quickly, the information contained in this guide is subject to change.
There are different support schemes in place for those who are employed and those who are self- employed.
Help for Employees
Practical steps for employees who have lost their jobs or are experiencing financial problems because of coronavirus include:
Coronavirus Job Retention Scheme
In the event of employees being laid off work temporarily, the government has set up a scheme to help employers to carry on paying them.
The Coronavirus Job Retention Scheme is available to all UK wide employers with a PAYE scheme that started on or before 28 February 2020.
HMRC will pay employers a grant worth 80% of an employee’s usual wage cost, up to £2,500 per month, backdated to 1 March 2020.
The scheme applies to those furloughed employees who have been asked to stop working, but who are being kept on the payroll.
If you were made redundant or laid off any time on or after 28 February 2020, your employer can hire you back and furlough you.
While you are on furlough, you might be able to do work for another employer without affecting your furlough payments. Before committing yourself, you should check the terms of your contract with your usual employer as your employment contract may not allow it.
Statutory Sick Pay
Individuals who have to self-isolate will be entitled to claim Statutory Sick Pay.
Employees who earn at least £120 per week, you should be entitled to Statutory Sick Pay of £95.85 per week. They may also be entitled to contractual sick pay, which would mean they would be paid more than £95.85 per week.
Temporarily, SSP will be paid from day one for people who have caught the virus rather than from day 4 which is currently the case.
Help for the Self-Employed
Self-Employment Income Support Scheme
The scheme is available to those people who are self-employed whose income has been negatively impacted as a result of the Corona Virus.
The scheme is open to those individuals where most of their income comes from self-employment and who have profits of less than £50,000 and will provide a grant of 80% of their profits up to a maximum of £2,500 per month.
HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant.
Initially the scheme will be open for three months with people able to make their first claim by the beginning of June.
Further information is available on the UK Government website.
Deferral of Valued Added Tax (VAT) payments
All UK VAT registered businesses with a VAT payment due between 20 March 2020 and 30 June 2020 will have the option of deferring their payment or pay their VAT as normal.
Although payments can be deferred, VAT returns must still be submitted on time.
There is no need to tell HMRC that a VAT payment is being deferred and no penalties will be applied by HMRC for deferred payments.
Deferral of Self-Assessment Payment
If an individual is unable to make their Income Tax Self-Assessment Payment due on 31 July 2020, payment can be deferred until 31 January 2021.
No penalties or interest for late payment will be charged if the payment deferred until January 2021.
Scottish Government Coronavirus Business Support Fund
A one-off grant of £10,000 available to small businesses who get Small Business Bonus Scheme Relief or Rural Relief.
An application for the Coronavirus Business Support Fund can be made from the local council website.
Councils will aim to make payment within 10 working days of receiving a grant application form.
Coronavirus Business Interruption Loan Scheme
This Loan Scheme has been set up to support small businesses that have been affected by Covid-19, these are available on repayment terms of up to six years.
To qualify, the business must be based in the UK and have an annual turnover of no more than £45 million.
Personal guarantees are not required for loans below £250,000.
Applications should be made via one of the accredited finance providers offering the scheme.
Those worried about debt
Those individuals who are struggling to meet Their mortgage repayments should contact their lender and request a mortgage payment holiday.
Taking a repayment holiday will not affect the mortgage holders rating.
Any mortgage holiday MUST be agreed with your lender first, don’t just stop your direct debit or standing order.
Stopping payments before agreeing to the holiday period with the lender will be recorded as a late payment, which will put mortgage holder into arrears which will affect their credit rating.
For further information on Mortgage Holidays, please visit:
The Mortgage Advice Service Scotland provides mortgage advice to people living throughout Scotland.
Those struggling with their rent, should check to see if they can get help through the benefits system. Evictions have been suspended for most tenants.
Those struggling with Council Tax need to check to see if they are entitled to a reduction. If they don’t qualify for a reduction, their council may offer a discretionary scheme to help with Council Tax payments.
People who are struggling with household bills should speak to their utility providers as soon as possible to agree a repayment plan.
Individuals who have debts should get in touch with their creditors and ask them if they would agree to suspend payments. Lots of lenders have special policies in place to help people who are affected by Coronavirus. Credit cards, store cards, personal loans and catalogue companies must offer payment holidays.
Don’t be afraid to ask for help
For those individuals whose situation is serious and If they are looking for a way to become debt free, then this may be the time to seek professional help.
Debt Advisory Services Scotland provides free debt advice to people residing in Scotland.
The Scottish debt help services that we provide include Trust Deeds in Scotland, and debt repayment plans as listed below:
Debt Management Plan and Debt Arrangement Scheme
Both the debt management plan and the debt arrangement scheme require you to repay your debts in full. Depending on your level of debt and the disposable income available for your creditors this can involve a long repayment term.
Trust Deeds Scotland
A Trust Deed in Scotland may allow you to become debt free earlier.
Scotland Trust Deeds provide many of the same benefits as debt repayment plans but with potentially a shorter repayment term (normally 4 years).
Once the agreed repayment term is completed and subject to having adhered to the terms and conditions of the Scottish Trust Deed, a substantial amount of your debt can be written off.
Trust Deeds in Scotland are legally binding arrangements where you make reduced monthly payments (based on your affordability) usually for 48 months. The interest on your debt will be frozen, and when you have successfully completed Scottish Trust Deed, the remaining balance of your unsecured debt will be written off.