Five massive financial changes happening on October 31 including end of furlough
SOME of the support for people struggling financially because of the coronavirus pandemic is set to end on 31 October.
Major help like the government's furlough scheme and banks offering payment breaks will no longer be available - here's what's changing and what help you can still get if you're struggling.
1. End of furlough
The government has covered the wages of millions of workers since the start of the pandemic thorough the furlough scheme, which covers 80% of wages of people up to £2,500 a month.
Some of it is paid by the government and some of it by the employer and the exact share has changed over time as the scheme has evolved.
Some companies have also chosen to top up the pay of furloughed staff up to 100% of their normal wage.
This scheme ends on 31 October but there are now new schemes in place as the coronavirus continues, supporting those who can't work or who are working reduced hours.
For those who can't work at all because the business is closed due to the highest level of lockdown measures, there's the lockdown Job Support Scheme where the government will cover two-thirds of people's wages.
And there is also the part-time job support scheme, which is for those who can work but who are doing less than their normal hours.
The government and the employer will cover two thirds of the wages for the hours someone can't work.
When this scheme was first announced workers had to be doing at least 33% of their normal hours, but changes announced by the chancellor Rishi Sunak mean this has been reduced to 20% and means more people should be eligible.
One in 10 workers remain furloughed and the schemes are designed to support jobs but there are fears that there will be a wave of redundancies when furlough ends.
What are my redundancy rights?
BEFORE making you unemployed, your employer should still carry out a fair redundancy process.
You are entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment, as long as you've been working somewhere for at least two years.
How much you're entitled to depends on your age and length of service, although this is capped at 20 years. You'll get:
- Half a week’s pay for each full year you were under 22,
- One week’s pay for each full year you were 22 or older, but under 41,
- One and half week’s pay for each full year you were 41 or older.
Sadly, you won't be entitled to a payout if you've been working for your employer for fewer than two years.
There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.
You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.
2. End of interest-free overdrafts
At the start of the pandemic, all banks agreed to offer overdrafts that were interest-free up to £500.
Loan repayment holidays
Overdrafts
3. Mortgage holiday application deadline
Homeowners have been able to take a break from repaying their mortgage if their finances have been impacted by the pandemic and more than a million people have already taken a break
The deadline for applying for this payment break for he first time, or the second time if you've already taken a break, is 31 October.
The break is temporary and interest still builds up which can mean you pay back more in the long term, the length of the loan can be longer or repayments higher when you do start paying them back.
These payment holidays will not have a negative affect on your credit file.
After 31 October, there will still be help available and anyone experiencing financial difficulty is urged to get in touch with their bank or lender as soon as possible.
The help available will be tailored to individuals and may still include a payment break but could be other support, but it will not be the kind of blanket-wide approach offered before.
Support after this date may appear on your credit file but the bank should explain to you if that's the case and what it means for you.
Anyone who has taken a payment holiday that is coming to an end should hear from their lender to talk through your options.
Remember, any breaks from mortgage payment must always be agreed with your lender - never just stop paying.
4. Borrowing help deadline
People with loans, credit cards and other types of credit have been able to take payment breaks to ease the pressure on their finances caused by coronavirus.
Banks and lenders were told by the financial regulator to make these payment holidays available for three months initially and then a further three months on top.
That includes:
- credit cards
- car finance
- personal loans
- stores and catalogue cards
- buy-now-pay-later schemes
- rent-to-own policies
- payday loans
Many people have taken advantage of this, essentially pausing the money they have to pay back (though interest still builds up).
But this specific support won't be extended any further and you have until 31 October if you want to apply.
After this, there will still be help available and anyone experiencing financial difficulty is urged to get in touch with their bank, lender or provider as soon as possible.
The help available will be tailored to individuals needs and may still include a payment break.
Anyone who has already taken a break will continue to pause payments for the period of time already agreed.
For example, someone who started a three-month payment break on 1 September would continue through to 1 December.
For anyone who has taken a break and is still struggling when repayments start again, there are new rules for support and lenders must consider suspending, reducing, waiving or cancelling any interest, fees or charges to prevent the debts getting out of control.
Any new help you get from 1 November onwards can affect your credit score, whereas lenders had agreed that the support for borrowers before 31 October would not impact credit scores.
The bank should help you understand how any support you get can affect your credit file.
Wages will take a hit from the coronavirus crisis with pay rises expected to be their lowest in a decade.
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