July 8th Budget Changes – What you need to know

Rishi Sunak announced a number of packages that he hopes will help stimulate the economy. I discussed what could happen on a post last week and it looks like I was quite off the mark! 😀

Here is the summary of items that may affect you.

Change to Stamp Duty

Currently, if you are buying a property you have to pay stamp duty on anything over the £125k limit. If you are a First Time Buyer (FTB) then this is up to £300k. Under the new rules this is being temporarily changed so there is no stamp duty payable on any property up to £500k. In January 2020 the average sold house price was just over £231k so this change will give buyers a real-world saving if they are looking to buy a house.

It is a buyer’s market at the moment as although less people are selling and this would usually drive up purchase prices, the are much less buyers out there so the buyer has a lot more ‘power’ in this transaction than they would normally do.

Change to VAT on Food, Accommodation & Attractions

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The standard rate on these items will be dropping from 20% to 5%. When looking at food – either going out to restaurants or getting Standard Rated food for take-away – the savings would look like this;-

A table showing how much you would save with the change in VAT on Food between £1 and £30

It works out at about a 13% saving but you can find out what the new price *should* be by taking the existing price dividing by 1.2 and then multiplying by 1.05

(£2 / 1.2) x 1.05 = £1.75

Now I say *should* because we have seen in the recent move to remove VAT from online Newspaper subscriptions however few news companies are looking to pass that saving to the subscriber, preferring to increase their profits. Hopefully restaurants will pass the saving on to the consumers but as this is new we will have to see. There is another ‘help’ for restaurants that I’ll cover later in this blog post.

The same reduction in VAT will also affect Accommodation and Attractions. So if you plan to go to LegoLand, or The London Dungeon, or you have a hotel booked AND you haven’t yet paid for it,  then you should see the price reduce by about 13%. If you have already paid it is worth checking with who you’ve booked through to see whether you can have your booking updated to reflect the new Standard VAT rate.

Jobs for Young People and A Job Retention Scheme For Furloughed Staff

There are two parts to this. There is a £2 Billion scheme which will help create jobs for Young People. They will be able to get a 6 month work placements if they are aged between 16 and 24. This is great news to help get young people into work and one of the challenges that has existed for some time is the lack of jobs out there for young people to actually get.

The 2nd part is the government is offering a bonus to companies who keep on their employees until January. The have stipulated that they must be earning more than £520 a month but as long as they continue to be employed until Jan 2021 the company will receive a £1k ‘Bonus’ for each employee. The question is whether this will just delay staff redundancies – and at the moment people can only guess.

£2bn Green Homes Grant

These funds will be available for home-owners to make homes more energy efficient. This scheme will start in September and should cover about 2/3rds of the cost of the work. At the moment there isn’t any more details on how this will work but I expect this will be shared over the next week or so.

A photo of a Hive Heating Wireless Thermostat

“Eat Out to Help Out” Vouchers.

To help encourage people to eat out and support the hospitality industry, it was announced that the government would be offering a 50% off voucher for adults dining at restaurants up to the total discount of £10 – during August. It will run Monday through to Wednesday and be at ‘participating’ restaurants. They will need to sign-up to the government’s scheme if they want to take part so don’t just assume the independent restaurant at the end of the road will give you a tenner off!

Apparently (obviously it hasn’t been tested yet) this will work along with other discount vouchers you may have – you could have a much cheaper meal out

I’m not sure this is the best way to kick-start the economy, especially when we are supposed to still be staying at home where possible and maintaining social distancing. But with August being the school holidays, I imagine there will be lots of people looking to take up this deal.

In Summary

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Cheaper food, cheaper hotels and cheaper days out. Jobs for young people and money to help improve the energy efficiency of your home. Finally there is also support for businesses who keep on staff until January. All of this is to help the economy.

The Reverend’s Final Thought

It isn’t what we were expecting but it is certainly better than nothing. I don’t imagine there will be many homes sold with all the uncertainty in the market (both housing and job). I also think that there will still be large numbers self isolating and staying away from other people – restaurants and attractions will not be enticing them at all, regardless of a possible saving.

I don’t think this household will be taking advantage of many of the ‘offers’. The reduction in food VAT might get used by us, but only for food we would be buying anyway. I doubt we will be enjoying days outs in August or September….it might be Christmas before ‘normal’ is a bit more ‘normal’ for us.

Look after yourselves as your number 1 priority and then work with what looks after the most at risk members of society.

 

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One comment

  1. Thanks for this run down.

    I was hoping for the £500 high street credit like everyone else I imagine!

    The Green Grant should be good, it should be enough to cover a new boiler if your boiler is old and not as efficient as it once was. Thats what I’m holding out for!

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