Mortgage payment holiday
Mortgage lenders have been supporting customers (including buy-to-let borrowers) who have experienced issues with their finances due to COVID-19. The payment holidays initially covered a 3 month period with the option of extending it further.
Around 1.9m mortgage borrowers have taken a payment holiday*, and for those that haven’t, they may be able to apply for one up to the 31 October.
(Source: *UK Finance, June 2020)
However, whilst a payment holiday may deliver much-needed financial help, do consider if it’s the most suitable route forward for you.
First, it’s not so much a ‘holiday’, but more a mortgage ‘deferment’. This is because the money owed is not being waived, it’s simply added to the overall outstanding amount.
Second, you need to agree this with your mortgage lender, so you can’t just stop making payments, as that might impact your credit rating.
Finally, there may be other options to consider (if on offer), such as paying a lower amount each month, or even switch to just funding the interest for a defined period (where the capital amount that’s outstanding would remain the same).
Job Retention Scheme
This scheme runs until the end of October. It’s applicable to those designated as ‘furloughed workers’ (these are people absent temporarily from work), and currently HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500
per month. So far, over 9.4m workers have been furloughed!**
From 1st July, furloughed workers can return to work part-time, with the employer paying for the days worked, and the furlough scheme covering the rest.
That said, until the end of October – the furloughed worker could receive 80% of their wages up to the capped monthly figure of £2,500, if furloughed 100% of the time.
In September the levels of contribution will change. HMRC will reduce its payment to 70% of wages for the hours the employee does not work (with employers contributing the 10% difference).
In October, this scenario will reduce to 60% of wages, with employers paying 20%.
Also, from August, employers will be asked to pay NI and employer pension contributions
Job Retention Bonus
The next element of the furlough scheme, to help ensure as many of those workers return to the workplace, is the provision of a one-off bonus of £1,000 for the business. This would apply to each furloughed employee (who’s paid over £520/month) that’s still employed as of 31 January 2021.**
Business support
If you run, or are responsible for, a small or medium-sized business, you will be
aware of the wide range of initiatives to deliver assistance. This occurs in areas such as reclaiming Statutory Sick Pay, business rates help, possible grants, more time to pay tax, and deferring VAT payments, or a reduced VAT charge of 5% for the tourism and hospitality industry.
Loans are on offer too. Initially, one of the main schemes here was the Coronavirus Business Interruption Loan Scheme, where the government is underwriting 80% of
the risk.
However, some businesses were complaining about the difficulty to secure loans, and in response to this the Bounce Back Loans scheme was then launched, where the government underwrite 100% of loans between £2,000-£50,000, with less hoops to jump through.
You will not be required to make any repayments across the first 12 months, and this period will also be interest-free, with a 2.5% interest rate, thereafter, agreed between the government and lenders. So far, in total £30.9bn of loans have been delivered to more than a million businesses!
(Source: **GOV.UK, A Plan for Jobs, July ‘20)
