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Next week’s Budget might not have any show-stopping tax rises – keep your eye on ‘Tax Day’ three weeks later for the Chancellor’s real plans
How brave is Rishi Sunak? In 2020 it felt as if the Chancellor was on our television screens every night, announcing one scarcely believable sum after another in state support. But when he delivers the Government’s financial plan on Wednesday, it will be only his second Budget. His first was in the shredder a fortnight later, when the country went into the first lockdown and all the usual rules about fiscal conservatism were forgotten.
Mr Sunak will attempt to both support workers and businesses who have been on their knees for a year, and raise some serious cash to pay back at least some of the gargantuan coronavirus bill. So, what’s going to be in the red box – and what isn’t, but should be?
Leaks suggest the “holiday” on stamp duty, taking properties up to £500,000 out of tax altogether, will be extended by at least three months. This is a welcome step and prevents the systemically important housing market going into stasis. Mr Sunak should go further, of course, or he’ll just have to extend it again in the summer, heaping unnecessary worry on buyers and sellers.
The Telegraph also reported this week that there would be more help for freelancers, probably the group worst hit financially during the pandemic.
The Chancellor has previously signalled he will ask the self- employed to pay back the support they’ve received by raising their National Insurance rate, bringing it line with conventional employees. There can be no argument there, for fairness and simplicity’s sake. But longer term, the Government needs to ensure freelancers are more financially resilient. One idea gaining traction is for employers to give staff the option of automatically saving a proportion of their salary into a “savings sidecar”, in case of emergencies. Like automatic enrolment into pensions, this scheme should also include the selfemployed.
As we report on Page 1, it sounds increasingly likely that tax on capital gains will be equalised with income tax rates, sooner or later. Announcing the raise on Wednesday but giving some notice would be a neat way of the Treasury bringing forward revenue as investors rush to turn paper profits into cash under the older, lower rates.
Another rumour doing the rounds is that the annual limit on Lifetime Isa contributions could be raised from £4,000. This would be a quick and easy way to help both young aspiring homeowners, and the self-employed who favour Isas’ flexibility over pensions. One of the unexpected changes from Mr Sunak’s previous Budget was the doubling of the Junior Isa allowance to £9,000, in what amounted to a bald giveaway to wealthy families. Increasing the “Lisa” to £10,000 a year seems fair.
As always there will be lots of arguing going on inside No 10 and No 11 over the coming days, and the Chancellor could yet decide now is not the time to hit anyone with tax rises.
What is curious is that, in a break from tradition, a series of consultation papers that would normally be published with a Budget are expected to be released three weeks later. Britain’s first “Tax Day” on March 23 may be far more significant than what we hear at the Dispatch Box.
The Government needs to ensure freelancers are more financially resilient in the long term
We will have “e-pounds” within two or three years and will be a virtually cashless society within a decade, the man who runs Britain’s cash machines has said.
A new digital sterling issued by the central bank will be widely used as a replacement for cash and take on the likes of digital currency Bitcoin, predicted John Howells, the boss of Link, the nation’s cash machine network.
There will be a period of 10 years when cash and e-pounds will still be interchangeable before cash use eventually dies out altogether, Mr Howells added.
“The shift will be accompanied by a massive Government education push similar to the move from shillings and pence during decimalisation in the 1970s, or the switch to digital television during the 2000s analogue switch-off.”
Existing digital currencies such as Bitcoin will never be an appropriate way of paying for goods, due to wild swings in its value, Mr Howells said.
‘Cash usage has almost halved and that is not going to come back after the pandemic’
Rather, we will follow a highly regulated Swedish- style approach that keeps our spending habits private.
“We won’t be dispensing Bitcoin any more than we will be issuing gold bars out of a hole in the wall,” Mr Howells added.
It follows similar comments made by Andrew Bailey, the Governor of the Bank of England, who said earlier this year that Bitcoin was unlikely to ever become a mainstream form of payment.
The central bank is currently considering the practicalities of designing and introducing its own official digital currency such as an “e-pound”, similar to the “e-krona”, which is already being trialled in Sweden.
The idea is to allow simple transactions between parties without involving banks or other go-betweens, allowing people to pay in the same way they do in cash today without any physical money changing hands or anything being lost to third-party costs. As with cash, people would be able to use the digital currency without having a bank account, in theory.
But the new system would supposedly be more secure, with less risk of money going missing down the back of the sofa or being lost in other ways, such as theft.
“I am expecting this to happen pretty soon, within only a couple of years,” Mr Howells said.
“Cash usage has almost halved and that is not going to come back as the pandemic eventually goes away. We are on the route to a very low-cash society. One in 10 payments are made in cash now. This is down from 60pc a few years ago. This could soon drop to one in 20.
“Once you get to that level, shops will stop accepting physical money altogether and cash machines and branches will get thinner on the ground. My job is to make sure there is still cash in machines that can live in harmony with the new system for those who will need help making the transition.”
Cash use is in chronic decline and has fallen sharply since the pandemic began. Cash machine use on the main Link network was down by almost 40pc at the end of 2020 compared with the year before. Cash machines on British high streets have closed down at a rate
of 340 every month since the pandemic started, according to payments firm Dojo. One in three customers has been refused service in a shop when trying to use cash over contagion fears, consumer group Which? found.
Two million people still depend on cash every day, but at the same time interest in the most prominent digital currency Bitcoin has boomed.
Endorsement of the cryptocurrency from institutions such as payment firm PayPal, investment bank JP Morgan and investment house Ruffer, plus investors betting on future price rises, caused its value to soar to record highs of more than $50,000 (£35,000) this year.
But its value dropped by some $10,000 in a matter of hours this week, after America’s Treasury Secretary declared it “highly speculative” and “inefficient” for transaction.
Compromise is key when it comes to buying a home. But how do you get exactly what you want? Build one from scratch, of course. Alan Williams wanted his dream house but was not prepared to pay the millions that it would cost on the market. So he set about building his barnstyle house in Hampshire, his third, and most ambitious, self-build so far.
His home, Overdale, has won the prize for Best Value Home in this year’s Daily Telegraph/Homebuilding & Renovating awards, an annual competition that seeks to find the best homes built, extended or renovated by readers of the magazine. Categories range from the best sustainable home and contemporary-style new property, to celebrating the spirit of self-build.
Other winners include a converted forge in Shropshire that was turned into a house for just £85,000 and picked up the Home of the Year gong. Winner of the Readers’ Choice award for best contemporary self-build is a London home named Eel’s Nest, which was built on a plot that was a 13ft 9in-wide garage.
Mr Williams and his wife, Melanie, built the 2,660 sq ft four- bedroom house for £ 150,000, equal to £56 per sq ft. Average costs to build a new home vary widely, but most agree that it lies somewhere between £160 and £280 per sq ft for a standard build – and can be a lot more for a very high specification design. Using the lower end of the estimate, the average cost to build it would have been £425,600.
What kept the figure so low is that the project was undertaken by Mr Williams himself, a building site manager, who did much of it after work and in his spare time. This helped keep the bill much lower, as estimates suggest that labour accounts for 35pc of the total building costs.
The couple lived in a mobile home on the site during the build, a triedand-tested route used by many to keep a lid on finances. Living on the plot also exempts buyers from the additional three percentage point stamp duty surcharge on a second home, providing you sell the old home within 18 months of buying the plot.
“This is the third self-build that I’ve done,” explained Mr Williams. “The first completely changed our lives: it suddenly meant we had no mortgage to pay and money in our account. Unlike before, when the washing machine went bust one month and the car needed repairing another, we actually had the means to pay on standby.”
It was by chance that the couple
stumbled on the plot of just over half an acre, 12 miles north-west of Winchester. It was home to a run-down tin bungalow with a corrugated iron roof surrounded by a ramshackle selection of wooden lean- tos. On the window someone had painted “For Sale”. It cost £450,000.
The condition of the ground presented the first hurdle for the new owners: just clearing the site to dig the footing took some time. “It was by no means a pretty green field waiting for a new house,” said Mr Williams.
However, the presence of the former dwelling made getting planning permission much easier, as it meant that they were able to build on the footprint of the original house through permitted development rights.
It also meant that connections to mains services including water and electricity were already there, saving the couple an estimated £ 10,000 in installation.
In a typical build, the superstructure (the structural walling and external cladding as well as roofing) accounts for the largest proportion of the costs, typically 25 to 30pc, with the foundations and floor structure following close behind.
In this case, Mr Williams carried out all the ground works, drainage and landscaping himself. “At first, I hired a digger but that was working out as expensive, so I bought a machine for £ 7,500 then sold it two years later for £6,500, which saved a lot in hire charges.”
A sure-fire way to keep costs down
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when self-building is to opt for a simple design, but the problem is that the end result is by necessity limited in its scope. With an eye for architectural details and an aspiration to design a house that “looks like it had grown” in its landscape, Mr and Mrs Williams took a different route.
Having already built themselves a cottage and a family house, they modelled this new property on a former agricultural barn with the central living space enjoying double-height, triple-glazed windows. The couple’s son, an architectural technologist, helped with the design.
Mr Williams clad the new house in flint, the presence of which in the
‘Coming home after a full day’s work and laying bricks every night was the hardest part’
area he could personally attest to, having moved great lumps of it out of the ground during excavations. He also used handmade Michelmersh bricks that are local to Hampshire, and cladding of black sawn timber.
Does he have any advice to wannabe self-builders looking to build on a budget? “Haggle hard when it comes to materials, as there is a big mark-up,” recommended Mr Williams. “Of course, it helps that I am in the trade,” he added. A quote for lintels came in at £10,000, which he was able to get for just over £2,000 by going direct to the supplier.
Despite never having trained in bricklaying, Mr Williams was forced to teach himself using YouTube videos after being let down at the last minute by a professional. “I took two months between projects to do it, which was both mentally and physically taxing,” he explained. “Coming home after a full day’s work and laying bricks every night was the hardest part, but there were days when I was up at 6am with the sunrise and a beautiful fresh morning and it felt very satisfying.”
Overdale took two and a half years to complete and the only professional help used was a carpenter to pitch the roof and roofers to make it weathertight, alongside a plumber and electrician.
Thanks to its rural position, which nevertheless offers easy access to Winchester, the market town of Alresford and trains to London Waterloo from nearby Alton station, the current estimated value of the house is £ 1.3m, potentially making the couple a tidy profit of £700,000.
“It’s my hobby now. I’ve got itchy feet to do it again,” said Mr Williams. His advice for fellow DIY builders? “Never work on Sundays. Take the day off and step away from the project. If you don’t, you’ll find by Wednesday you can’t focus and start to make expensive mistakes.”