As lockdown continues to challenge Scotland’s health and economy, Martin Lewis has issued new advice on how to navigate this tricky financial situation.
In the latest edition of his weekly newsletter, the founder of MoneySavingExpert.com included updates on getting cash refunds for holidays - and who to report it to if you don’t, self-employment income support payouts, reduced student loan repayments and the proposed insurance payment holidays.
“Finally this week there's a bit of hope for some who've fallen into the cracks. While far from ideal, it's a way to use the new Bounce Back Loan Scheme to support yourself,” Martin wrote.
The UK Government small business Bounce Back Loan Scheme can be used by the self-employed to support their income if they have no other support.
The 100 per cent state-backed Bounce Back loans for up to £50,000 have been available since Monday, May 4. They are interest and payment-free in the first year - so pay it off then and it's no cost, and at a very low 2.5 per cent annual interest after that.
Martin said: “We've now had it officially CONFIRMED there's nowt in the loan rules stopping you using these loans to support your income (though there can be tax/regulation issues depending on your firm's structure). Of course it's far from ideal - these are loans, not grants - but it's an option.”
Here are the latest 'need-to-knows' from Martin Lewis
The Competition and Markets Authority says firms must offer cash refunds for cancellations
You can now report firms that don't. The Competition and Markets Authority (CMA) says it has been swamped with complaints from consumers who are being rejected for refunds after coronavirus cancellations.
It says regardless of the contract, you are usually due a full refund if:
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No goods or service was provided
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The firm can't provide the service due to lockdown
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You can't use the service due to lockdown
The CMA is investigating all sectors, but will start with:
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Weddings and private events
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Holiday accommodation
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Nurseries/childcare providers
The CMA plans to talk to firms first and then look at enforcement action if they still don't comply. You can report firms directly for it to look at.
You can see how to report firms and watch Martin interview a CMA boss where they talk through exactly what your rights are here.
Self-employment income support payouts coming faster
The Self-Employment Income Support Scheme will pay out 80 per cent of profits, up to £2,500 a month, to those who are eligible.
Martin said: "Contact from HMRC to start this week by letter, text and email with applications opening on Wednesday, May 13.
"Payments to reach accounts six working days from application, so the first payments would be on May 21.
"The payment is currently planned to cover March, April and May - three months payout."
If you want to know your application appointment date now, you don't need to do this, but HMRC has an online eligibility tool for the scheme.
If you go through that, afterwards you'll be randomly allocated a date from 13-18 May.
The Lifetime ISA (LISA) withdrawal penalty has been removed for a year
The financial journalist advises that "all first-time buyers aged 18-39 should consider saving in a top LISA, as the state adds an unbeatable 25 per cent on top towards your first qualifying home - so put the maximum £4,000 a year in and get £1,000 a year added for free."
Just be aware if you withdraw money for any reason, other than buying a qualifying home or once you're 60+, you will effectively pay a 6.25 per cent penalty.
To help people access funds during coronavirus, that has now been removed until April 5, 2021 and backdated to March 6, 2020 (ie, if you've done it since then you get the money back).
Martin explains how the penalty works: “The standard LISA withdrawal fee is 25%. So put £1,000 in, you get the 25% bonus = £1,250. Withdraw it and 25% was taken off = £937.50, ie, a 6.25% loss.
“Now the withdrawal charge is just 20%. So put £1,000 in and you've £1,250. Withdraw it and 20% is taken off = the £1,000 you put in.
“Those who've got an existing Help to Buy ISA, the LISA's predecessor, never paid a penalty anyway, so there's no change there.”
Student loan repayments cut as the threshold is increased
“While nothing has structurally changed, the way all (post-1998) student loans work means you repay less if your income drops and this has just been given a boost by the annual April increase to the threshold," Martin wrote.
Plan 1: (All Scotland starters 1998-2012)
- You now start repaying above annual earnings of £19,390 (was £18,935)
University leavers repay 9 per cent of income above these thresholds, so the increase means if your salary hasn't gone up, you pay less.
If you’ve been put on furlough or your salary has been reduced, the deduction will automatically adjust to reflect this.
Insurance payment holidays
Car, home, travel, boiler, life, private medical and more are all available on request.
City regulator, the Financial Conduct Authority (FCA) has announced proposals, likely to be in place by Wednesday, May 13, that means people can get the following:
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Payment holidays for 1-3 months on request. This is for those paying monthly insurance and struggling due to coronavirus. As most monthly insurance payments are actually loans, interest still racks up, so only do this if really needed
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Waiving cancellation fees for those ending policies
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Reassessing policies on request to ensure they're suitable. For example, if your car mileage has dropped substantially - and they shouldn't charge fees if you do change
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Remove 'unnecessary' extras on request. For example, if you want to drop your 'key cover' as you're not driving, it should be allowed free of charge
Payment holiday deadline dates
If your finances are degrading and you're debating whether to take a payment holiday, don't panic. Here are the last application times for key schemes:
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Until at least June 20: Mortgage payment holidays
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Until July 9: Credit and store cards, personal loans and catalogue debt
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Until July 27: Car finance (PCP, lease, HP), pawnbroking, buy-now-pay-later & rent-to-own, payday loans (interest and payment freeze)
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Until August 13 (TBC by FCA): Insurance - car, home, loan payments
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Until October 20: Individual voluntary arrangements
You can also request an up-to-£500 0 per cent overdraft too from your bank or building society.
Universal Credit system unclogging - if you've not applied, now is the time
The Universal Credit system had peaked at 48,000 applications in a single day - 10 times the normal demand.
Figures for a week ago show applications down to 32,000 which should mean things are running more smoothly and quickly.
If you're struggling due to lower income, it's worth checking - you can be eligible for Universal Credit even if you're getting other help, such as furloughing or Self-Employed Income Support. These will just be counted as income when they work out how much you may get.
The Martin Lewis Money Show coronavirus live special is on STV at 8pm on Thursday. You can sign up for the MoneySavingExpert.com newsletter here.
Join our Money Saving Scotland Facebook group
Whether you're already a budgeting pro or are just looking for some money saving tips, join our Money Saving Scotland Facebook group here.
Discover the best shopping bargains and deals, the latest news on benefits, bursaries and grants, and learn from other members about their best money saving advice.
https://news.google.com/__i/rss/rd/articles/CBMiVWh0dHBzOi8vd3d3LmRhaWx5cmVjb3JkLmNvLnVrL2xpZmVzdHlsZS9tb25leS9tYXJ0aW4tbGV3aXMtaXNzdWVzLW5ldy1hZHZpY2UtMjE5ODA5OTHSAVlodHRwczovL3d3dy5kYWlseXJlY29yZC5jby51ay9saWZlc3R5bGUvbW9uZXkvbWFydGluLWxld2lzLWlzc3Vlcy1uZXctYWR2aWNlLTIxOTgwOTkxLmFtcA?oc=5
2020-05-06 17:09:50Z
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