Savvy Saving
(Last Updated: 24th June 2020)

The Aga Khan Economic Planning Board (AKEPB) has created the Savvy Saving column in the Al-Saha Daily Digest and on social media to provide financial planning tips. We cover updates on government regulations and how they affect the Jamat during and after the COVID-19 crisis. For support or advice, reach us at: [email protected]

Be Aware of Online Fraud

The Government has warned of an increase in cyber fraud targeting the vulnerable. To help protect yourself from online fraud you should:

- Reject offers that come out of the blue
- Get the name of the company that is contacting you and establish their credentials. In the case of a regulated financial services firm, this can be done by searching the FCA’s Financial Services Register here
- Beware of adverts on social media channels and paid for/sponsored adverts online
- Do not click on links or open emails or attachments from senders that you don’t already know
- Be wary of promised returns that sound too good to be true
- Take your time to perform all the checks you need, even if this means turning down an ‘amazing deal’
- Do not give out personal details (e.g. bank details, passwords and pin numbers, addresses, existing insurance/pensions/investment details)
- Seek financial guidance or advice before changing your pension arrangements, making other financial investments or purchasing financial products

For more advice on how to protect yourself from online fraud or scams, visit the FCA’s ScamSmart website.

Reminder! VAT Payments and Covid-19 Deferrals

Business owners in the Jamat are reminded that the VAT deferral measure introduced by the Government on 8 April was for VAT payments due to HMRC between 20 March and 30 June only. Payments can be deferred until 31‌‌ March 2021. However, VAT payments due after 30 June will still need to be paid in full and on time to avoid late payment charges.

For more information, please review the government website.

Non-Eviction Ban for Renters Extended

The Government has extended the ban on evictions put in place in response to the coronavirus pandemic. The announcement means no tenant can be evicted from private or socially rented housing in England and Wales until at least 23rd August 2020. The original ban had been due to end on 25th June 2020. If a landlord does want to evict a tenant in England or Wales, they will still need to give at least 3 months' notice before starting proceedings to do so. The Government has also said that it is working with the courts and judges to devise a set of rules to help those who have been particularly affected by coronavirus to ensure that they are protected when evictions do restart.

Saving on Your Council Tax

Check if you’re eligible for saving on your council tax bill:

- If you are struggling financially due to the Coronavirus, many councils offer payment holidays (i.e. a temporary break from paying). You will need to call your council and ask them.
- If you receive benefits or are on a low income, you can get up to 100% off your bill. Claim this as soon as you can, as it may not be something that can be backdated - so the longer you wait, the less you will get.
- If you are eligible for 'severe mental impairment' discount.
- If you suffer from Alzheimer's or Parkinson's, you won’t have to pay if you live alone, or will receive 25% off if you live with someone.
- If you live alone or with under-18s and/or carers, you can get 25% off and can claim for past years.
- Full-time students are exempt from council tax

Avoiding Payday Loans

Data by the FCA shows that the average interest rate on payday loans is over 1000% per year! Such debt can be very dangerous. Here are some things you can do to avoid a payday loan:

- Ask for a grace period from the people or businesses that you owe money to. Be transparent about your circumstances and be clear on when you can pay.
- Talk to your employer about an advance on your salary.
- Consider taking a personal loan with your bank.
- A final option is to get a cash advance on your credit card. Their annual interest rates are still very high, but lower than a payday loan.

Furlough Scheme - Updates for Employers

The UK Government has announced that the job retention scheme, or furlough scheme, will finish at the end of October. Furloughed Workers will be allowed to return to work on a part-time basis from July, but with companies paying 100% of wages while they work. It will be down to individual firms to decide what part-time means. Furloughed workers will continue to receive 80% of pay until the end of October. However, there are important changes for employers, who will need to begin contributing towards this amount:

- From August, employers must pay National Insurance and pension contributions.
- From September, employers must contribute 10% of pay.
- From October, employers must contribute 20% of pay.

To help simplify the changes that come into effect from August, use this easy-to-understand graphic by the BBC.

Student Loan Deadline - 22nd of May 2020

The Student Loan application deadline for students going to University this year is Friday the 22nd of May. Students who are returning to university for their second, third or later years are asked to apply to the Student Loans Company by 19th June 2020. To apply you don't need to know what course you're taking or even which university you'll attend. If you decide to defer or not to go, the loan will lapse and you won't be charged. To make an application, visit the government website.

If you miss the deadline, you can still apply, however there is a risk you won’t receive payments before the start of the term. The absolute latest you can apply is 9 months after you start your course.

Renters struggling to pay rent

If you are struggling to pay rent during this outbreak it is advised that you contact your landlord to let them know your situation and work out a repayment plan.

For landlords in England and Wales the Government has said three months' notice (until June 25th - extended until August) needs to be given to tenants before starting eviction proceedings. Please note that this change will not affect eviction proceedings already under way.

The emergency coronavirus legislation for Scotland prevents tenants being evicted for up to six months.

Beyond these three or six-month periods, the expectation is to work on an affordable repayment plan which takes into account the tenants circumstances.
Additionally, private landlords are eligible for a three-month buy-to-let mortgage payment holiday if your tenants are experiencing financial difficulties.

How to Access Basic Essentials if You're Vulnerable During Coronavirus

If you have a medical condition which means you're classed as 'extremely vulnerable' during this outbreak, you (or someone else on your behalf) can register for assistance on the government website.

The assistance available includes:

- Free deliveries of food parcels. Your local authority will deliver a box with basic supplies such as pasta, cornflakes, tea bags and fruit. If you receive one it'll be left on your doorstep (or you can request help bringing it inside if you require).
- Medical supplies. You can get medicines delivered by community pharmacies.
- Basic care needs. This can include help with bathing or cleaning your home.

If you need support, register on the government website.

3 Steps to Protect yourself From Fraud

Scams and fraudsters are using the uncertainty of the current climate to target innocent individuals and businesses. To protect yourself from fraud, follow these 3 simple steps:

1. Stop – Take a minute to think before responding to a request or providing information.

2. Challenge – Remember, it is perfectly okay to reject or refuse a request. Especially if you are unsure. Simply confirm if the situation is genuine by using publicly available contact information for organisations.

3. Protect – Take immediate action if you feel you have been scammed. Ensure that you regularly update your software and use strong passwords to keep yourself secure online.

For more information refer to the Government’s advice.

3 months payment freeze for those struggling to make payments on vehicles

As part of measures to support consumer credit customers, firms are expected to provide a three-month payment freeze to customers who are having difficulty meeting finance or leasing payments on their vehicle due to coronavirus. If you are experiencing temporary payment difficulties due to coronavirus and need to use your vehicle, speak to your firm as they should not repossess your vehicle, or end any agreement that was made. For more details on the newly introduced measures, please visit the FCA website.

Getting Money back for cancelled Flights

Many airlines and holiday companies are now choosing to proactively cancel trips. If this happens, then in principle you should generally get a full refund, but in some cases that's proving hard in practice. Many airlines now only offer vouchers via their website – but you don’t have to accept them. Under EU flight delay rules you are entitled to choose between either a refund for the flight that was cancelled or an alternative flight. If your airline is not offering a full refund via its website call them to ask for a refund

Reducing Utility Costs

Creating a budget is a great of looking at managing your money. It can allow us to see which fixed costs can be reduced and which discretionary expenses we really need especially during the current circumstances. As most utility costs are variable, it is quite possible that with us staying at home these are due to increase. However we can take some measures to ensure they stay on the lower side, such as using your thermostat effectively, turning off sockets which are not being used, more ideas can be found here.

Government measure on rentals and mortgages

This week’s Wise Wallets podcast covers important information on what government measures are in place to support tenants with their rent payments and landlords for their mortgage payments. Tune in to today’s Wise Wallets podcast to learn more.

Subscription Entertainment – Free Trial Periods

Although now is not the best time to be spending more on subscription fees, did you know that Netflix, Amazon Prime and others offer free trial periods for up to a month! However, make sure you check when the free trial expires and set yourself a reminder. In most cases, you will need to sign up for the service and if you do not cancel your membership at the end of the free trial, you start paying the subscription fees!

Job Retention Scheme Updates for Employees and Employers

Update for Employees: The Government has updated the Coronavirus Job Retention Scheme guidance to extend eligibility for furloughing of staff.  This means employers can now claim for furloughed employees that were employed and on their PAYE payroll on or before 19th March 2020, rather than the previous cut-off date of 28th February 2020. Here is more information from the Government.

Updates for Employers: The online portal is due to open today, Monday 20th April 2020. Payments will be made within six working days. Download the Step-by-step guide produced by HMRC.

Saving Money on Energy Bills using Price comparison websites

If you’re looking for a way to cut your bills or find out which product best suits your needs, price comparison sites are a good way to get an overview of what’s on offer.

Switching energy provider can save you hundreds of pounds on your utility bills.
Thanks to new rules, many energy suppliers can now switch you in just 17 days, so the whole process is quicker and easier than ever before.

If you get a Warm Home Discount, make sure the supplier you’re switching to offers the discount.

The attached link shows all the Ofgem’s accredited comparison sites

Balance Transfer Credit Cards

The typical credit card interest rate can be 19% (or more), which can make repayments challenging because the amount owed continues to grow as a result of the added interest.

For those with existing credit card debt, it might be worth looking into obtaining a balance transfer credit card as these offer a period of 0% interest on balances transferred from other credit cards. This could provide you with the time you need to pay down existing balances by consolidating your debt without ending up with new interest charges. However, you are usually unable to transfer balances between cards owned by the same credit card provider.

Loan Sharks

Borrowing money from Loan sharks can be very dangerous both personally and financially. When you first meet them, they can come across friendly and understanding to your problems to gain your trust and make you more likely to borrow money from them. Borrowing money from loan sharks involve extremely high and often unmanageable interest rates. Tune in to today’s Wise Wallets podcast to learn more about managing personal debt.

Credit Card Debt – Government and FCA Measures

The Government and Financial Conduct Authority have announced a three month payment freeze on credit card debts for those experiencing financial difficulty due to the Covid-19 outbreak. It should not affect your credit file so you should contact your bank or credit card provider from today to take advantage of this. You can apply for this anytime from now up until 14th July 2020 but note that your bank or credit card provider is not obliged to grant you the payment freeze! They may suggest alternative options.

The risks of cashing in your pension early

If you are under 55 and want access to short-term cash, it may be tempting to cash in your pension. Be aware that unlocking this money will lead to a tax bill of 55%, as well as the potential of penalties by your pension provider. It is advised to seek alternative solutions. Find out more about the risks here.

For those who are unable to collect state pensions from the Post Office due to illness, you can appoint a permanent agent to pick it up for you. Call the Post Office to arrange this. Ensure that you trust this person!

Save Money If You’re Not Using Your Car

If you are not using your car due to the lockdown, which restricts driving to essential journeys only, you may want to consider Statutory Off Road Notification (SORN). This means you agree to take your car off public roads (including public/street parking) in exchange for a refund on any remaining full months of car tax that you have already paid for. If you SORN your car, you are not legally obliged to continue insuring it though this means the car won’t be covered for theft or damage. This doesn’t apply to electric cars, which are already tax exempt. For further details on how to SORN your car, visit the Which? website here

School Meals

If you qualify for benefits-related free school meals, the government has provided guidance to schools on how to continue to provide parents this support.

The first step is to have a conversation with your school to see what they are doing to address this issue. Potentially if they are open for certain groups it may mean that they have an in-house caterer or an alternative provider. If they are not open, the Department of Education has been in touch with schools and has agreed to a centrally-funded national voucher scheme that could be extended to a supermarket voucher. It is important to find out what approach your child’s school is taking. Details on what the government is offering can be found here.

Caution When Using Credit Cards

As we manage our finances, it is easy to be lured by the appeal of a credit card.  However, credit cards are a dangerous way to get yourself into debt and a tough and expensive way to get out of debt.  Credit cards can often have interest rates as high as 19% which are calculated monthly and compounded.  This means you end up paying much more than you borrowed.  This does not account for annual fees and late payment charges.  If you miss a payment, credit card debt can impact your credit score which will make it harder to borrow in the future.  Make sure you understand the real cost of spending on a credit card before you use one and be prudent with your choice.  Information can be found online here. If you are not sure and need some more guidance, the Aga Khan Economic Planning Board is here to support, please email us on [email protected].

Save Water and Save Money

Being at home full-time results in an increase in the amount of water you use and impacts your bills.  There are ways to save money and the environment.  Most water providers will offer you options where you can manage your water consumption including tap aerators, water saving shower heads and bag type water-savers for your cistern.  Using these tools can save you more than 1/3 off your monthly water bills.  Watch how you use water and see if there are small things you can do to save on regular usage.  Discuss it with your families and make sure they are prudent with their usage helping both the monthly bills and contributing to taking care of the environment. Find more information here.

Savvy Learning

Keeping children occupied during the pandemic whilst monitoring your spending can be difficult. There are many savvy ways to do this as lots of companies, big and small, recognise the challenge parents are facing. Facebook, YouTube, Amazon and Netflix to name a few are offering free and discounted classes for children covering a range of arts and crafts, cooking, sports and storytelling. It’s also worth reaching out to your local holiday camp providers, many of whom have replaced camps with discounted online classes.
Examples include: Audible - free audio books, Julia Donaldson – story telling on Facebook, YouTube - Cosmic Kids Yoga, PE with Joe Wicks have been very popular.

Contactless Card Limit Raised

In a bid to help combat the spread of coronavirus, the contactless card spending limit in the UK rose to £45 (previously at £30) on 1 April 2020. The changes will take time to roll out so not all stores will enable the £45 cap immediately. To help prevent fraud, you will still have to tap into your PIN every five contactless payments. Be sure to check your bank statements regularly, keep track of receipts and check your credit report.

If you prefer to avoid touching keypads entirely, you may be able to use contactless payments on your smartphone as these do not usually have a contactless spending limit.

Stay Wary – Fraud Alert!

Watch out for scams and ensure you are absolutely vigilant when sharing personal or bank details. The Government or any reputable institution would not ask for you to share your personal information by email, text or over the phone. During this time of uncertainty, new types of scams are appearing daily, we urge the Jamat to be extra careful.  Recent scams include being asked to hand over an upfront fee when applying for credit or a loan that you never receive, being enticed to invest in ‘good causes’ with a promise of high returns, or ‘clone firms’ claiming to sell insurance products for authorised firms and even grocery stores offering vouchers. To avoid being scammed, double-check contact details of firms that contact you, and do not click on links or open emails from unknown senders. For more information on coronavirus scams and how to protect yourself, visit the Met Police or FCA.

Help paying your internet or mobile bill

If you are struggling to pay your internet or mobile bill, contact your provider as soon as possible to see what help can be provided.  The UK’s major internet and mobile providers – namely BT/EE, Openreach, Virgin Media, Sky, TalkTalk, O2, Vodafone, Three, Hyperoptic, Gigaclear and KCOM – have agreed to work with customers who find it difficult to pay their bill as a result of Covid-19 to ensure they are appropriately supported.  Providers will remove data allowance caps on fixed internet services (but these will still apply on mobile contracts).  Providers have agreed further measures to ensure vulnerable consumers, including those self-isolating, can stay connected.

Preventing Fraud during COVID-19

Please be on high alert to frauds and scams.  Certain fraudsters are using this opportunity to take advantage of Jamati members and others.  Please ensure that you are extremely vigilant before parting with your money, personal bank details or other personal information.  At this time, there are no AKDN or Jamati fundraising activities taking place.  Offerings that you might usually make in Jamatkhana are also not being accepted.  Please do not respond to any requests for money transfers to either AKDN or Jamati Institutions either online or via telephone.  Click here for further information.

For guidance from the Aga Khan Economic Planning Board on frauds click here.

Shop around for the best interest rate

If you have money in a fixed rate savings account (an account that promises a fixed interest rate, if the investor agrees not to withdraw for a fixed period of time), there is usually a penalty for withdrawing money before the fixed period ends.  However, some banks have agreed to allow access to money without charge, either through early access to or cancellation of the account.  Check with your bank if you are able to withdraw money and under what conditions.  Note: if you have a good interest rate, only withdraw if necessary. For more information, review the accessing money in savings accounts section on the Which? Website. If you are looking to put money into a savings account before interest rates change, visit MoneySavingsExpert for details of the best rates.

Selling items you no longer need

Use this time at home to do a “spring clean” and pick out things you no longer need which have monetary value. We suggest you consider selling these on eBay or other similar sites. Be sure to read and follow the procedures of each website closely to ensure transactions are completed correctly and securely. Stay safe and maintain social distancing even when the courier company comes to pick up the items you are selling. Click here for more information on how to sell goods on eBay.

Requesting help from your Local Council

If you believe that you are unable to make your council tax payments as a result of COVID-19, please reach out to your local council in advance of the payment date for guidance. The government has set up a hardship fund for English councils. For an overview, click here.

If you are claiming Universal Credit, you may be able to get some help towards paying your local council tax. Please ensure you apply for a reduction at the time of your claim to your local council as payments are not typically backdated.

Postponing your rent

For those of us renters who have been impacted by COVID-19, if paying your monthly rent has become difficult, the government will ensure that you do not face the threat of eviction for at least three months.  Legislation is being created so that landlords are not able to start proceedings to evict tenants for at least three months.  As a starting point, speak to your landlord to see if you can work out a deferred payment plan explaining your individual circumstances.  During this time, ensure that you are being careful with your finances and only spending on necessary items.

Postponing your mortgage payments

Some of us have experienced sudden changes in our employment and financial circumstances because of COVID-19. If meeting your monthly mortgage payments has become difficult as a result, the government has announced they are working with mortgage providers to provide support with options such as a three-month mortgage holiday. Please speak to your lender to understand if you are eligible, the measures available and the resulting change in your terms. Although a mortgage holiday could provide you with temporary relief, it will mean that your balance and payments could be higher than they were before the relief measure.

Managing your insurance policies

Use this time indoors to ensure that all your insurance policies are all paid and up to date. This includes your life insurance and critical health policies. If you have any upcoming trips or events understand what the cancellation terms are or what the insurance policy will cover. If you are unsure, reach out to your policy provider and get the full details.  The Association of British Insurers has stated that COVID-19 should be covered by most providers, see details here.

Managing your utility bills

If you are struggling to pay your utility bills, the government has launched an emergency package with energy suppliers, for more information please click here. Reach out to your utility suppliers to discuss a payment plan that can work for you. As we remain indoors, we should remember to be sensible in usage of our utilities in order to control an increase in amounts owed.

Saving on your gym memberships

Exercising prudence with money is more crucial now more than ever. As gyms are temporarily closed, it would be prudent to check if you can freeze or cancel your membership. We also advise reflecting whether you really use your gym membership. If you don’t, it may make sense to let it go permanently. There are many free or subsidised exercise options available online, YouTube has a great selection.

Saving on your transport

In order to combat the spread of COVID-19, most of us will not be commuting to work for the foreseeable future. We suggest seeking a refund on your prepaid commuter transport passes. For example, you can find information on seeking refunds from the TFL website by clicking here.