Billions of pounds in support for struggling households has been paid out since the first lockdown, protecting more than nine million jobs.
The furlough scheme had been due to end on October 31 but has now been extended for a month. It means staff who cannot work will have 80% of their wages (up to £2,500 a month) paid by the Government.
Employers will have to pay their furloughed staff’s National Insurance and pension contributions – roughly 5% of their wages. The extension is available to any UK worker on their employer’s payroll before October 30. The less generous Job Support Scheme due to start this month has been postponed until after lockdown.
Chancellor Rishi Sunak last week announced more help for self-employed workers. The Self-Employment Income Support Scheme will now allow workers to claim 80% of their earnings this month, and then 40% in December and January. The claim window will open at the end of the month, and the maximum grant over three months is £5,160. Grants will also be available for February to April. To claim, you have to earn more than 50% of your income from self-employment and make less than £50,000 a year. Unfortunately, those locked out of help due to previously having had trading profits of more than £50,000, or who employ themselves through a limited company, are recently self-employed or freelancers, are still excluded.
Borrowers who have not yet taken a six-month payment holiday will still be able to under new measures announced last week. The rules apply to mortgages, personal loans, credit cards, motor finance, rent to own, buy-now pay-later, pawnbroking and high-cost short-term credit. However, the maximum payment holiday remains six months: those who’ve already reached that limit cannot extend it without it being recorded on their credit file.
Borrowers have until January 31 to request a payment deferral, but the Financial Conduct Authority (FCA) is asking customers not to contact their lenders yet. It says further updates, including from lenders, are imminent. Those who’ve already taken a six-month holiday but are worried about resuming payments are advised to speak to their lender to arrange alternatives. Those opting for new deferrals within the six-month limit should note that it could still impact on your ability to borrow — even if it isn’t recorded on your credit file.
Banks also handed out more than 27 million £500 interest-free overdrafts during the crisis but will no longer be required to do so. Banks can now charge overdraft rates of up to 40% or more.
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