Lockdown 2: Furlough & payment holidays updated

Measures will now last until the end of March 2021.

Despite the hopes that things would get back to normal, it’s abundantly clear they won’t. Which means a new lockdown in England and restrictions in the rest of the UK.

And that means a very high risk of more job losses, so we’ve had a series of announcement since the weekend of financial measures to help support workers.

Here’s what we know so far.

Your income

Furlough extended

The Job Retention Scheme (aka “furlough”) is back in England. It was due to end on the 31st of October, but it’s been extended. First, on that day it was revealed at that three-times delayed press conference that it’ll carry for another month – until 2nd December 20202.

But just a few days later it’s been announced it’ll now be extended until March 2021.

As before 80% of a furloughed employee’s wages will be covered by the government up to £2,500. The employer will be expected to cover National Insurance and its pension contributions. It’s possible to be furloughed part-time.

To qualify you need to have been on the payroll on the 30th October 2020 – but it’s up to the employer if they want to put you on furlough. You don’t have to have been furloughed before to be eligible this time.

It’s possible again for anyone who’s left an employer or been made redundant to be rehired and placed on furlough. The cut off for this is 23rd September 2020.

The government has confirmed that other parts of the UK will be able to furlough again too.

There will be a review in January in case things have changed.

The Job Retention Bonus has been scrapped with another measure to be announced at a later date.

The Job Support Scheme which was due to start on the 1st November will now in April 2021.

Increased support for some self-employed

The Self-Employed Income Support Scheme is boosted for November to 80% of income. This covers November, December and January and is capped at £7,500. Applications for this will also open on the 30th November a few weeks earlier than planned.

Sadly there’s no change for anyone who’s been excluded from the previous support measures.

Your bills

Deferrals on things like mortgages and credit cards were also due to end last weekend, but most will be back.

The rules are still being confirmed, but the FCA has submitted proposals which are likely to be what we get. Given that furlough has now been extended until March next year it’s possible we could see the same with these. I’ll update this article when the full plans are announced.

Here’s what they’re saying, starting with pausing mortgage payments.


If you’ve not had a mortgage holiday you’ll be able to get two deferrals of up to six months. Anyone who is currently deferring payments or has taken one during the initial six months can request an additional three months.

However, in total you can’t defer for more than six months, and you can only make two requests in total. You’ve got until the 31st January to request a mortage holiday.

Other credit and loans

For other forms of credit the FCA is saying you’ll be able to request a six-month break in payments, or a three-month extension if you’ve already had one, for the following:

  • buy-now pay-later
  • car finance
  • credit cards
  • pawnbroking
  • personal loans
  • rent to own

Updated details on the proposal say that the total will be six months, as it is with mortgages, regardless of when this is a new request or an extention.

Any breaks for high-cost short-term credit (i.e. payday loans) can only be requested for a single month – and only if they haven’t yet had a deferral.

If you take any of these deferrals, including mortgages, they won’t appear on your credit file, but that doesn’t mean they won’t have an impact on your ability to borrow money in the future.

And most importantly, interest will continue to rack up when you pause payments.

For more on this listen to last week’s podcast episode where we talked about what to do when payment holidays end.


Sadly nothing has been announced yet about bringing back those £500 interest-free overdraft buffers. If you are overdrawn you will now be paying close to 40% interest – making it one of the most expensive ways to borrow.


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