Ten key changes in August that could affect your finances

Here’s our round-up of ten key money-related changes coming up next month that could affect your household finances.

1 August – bar-coded stamps replace older versions

Stamps without bar codes will no longer be valid from August. By using one after today (Monday 31 July), you risk the recipient being asked to pay a surcharge of £1.10.

If you do find old stamps stuck in the back of a drawer, you can exchange them for free using Royal Mail’s swap out scheme. But it’s not quite as simple as taking your old stamps to the Post Office and swapping them for the new bar-coded variety. You’ll need to pick up a form from the Post Office (or print it off Royal Mail’s website), fill it in and send it off - along with the old stamps - to a freepost address.

1 August – alcohol gets more expensive

The current freeze in duty on alcohol end on 1 August – this means the price you pay for your wine, beer and spirits will increase.

Alcohol duty rates haven’t changed since the autumn budget of 2020. But the freeze comes to an end tomorrow (Tuesday 1 August) with a 10.1% price hike. This is the biggest single alcohol duty increase in almost 50 years.

A new scheme that taxes alcoholic drinks according to strength is also being put in place tomorrow.

The changes are likely to result in about 44p being added to a bottle wine, while the price of a bottle of port will probably rise by about £1.30.

It’s not all doom and gloom for drinkers though – from tomorrow beverages bought in pubs will see a price cut under the ‘Brexit pubs guarantee’. The ‘draught relief’ will cut alcohol duty by 9.2% for beer and cider and 23% for wines and spirits.

1 August – Costa Coffee reward scheme becomes less rewarding

Loyal Costa Coffee customers will have to shell out more before claiming a free drink from 1 August. The coffee shop’s loyalty scheme previously gave you a ‘bean’ token – or two if you used a reusable cup – for every drink you bought. You needed to collect eight beans to claim a free drink.

From 1 August, you’ll have to collect ten beans to get your free drink.

With a Costa cappuccino costing £3.45, you could be looking at forking out an extra £6.90 before you get your freebie.

1 August – personal independence payment changes 

The DWP is introducing a new ‘light-touch’ review for some people claiming personal independence payment (PIP) from the start of August.

The changes are for claimants who:

• have ‘high levels of functional impairment’
• have no likelihood of their condition improving
• have been claiming PIP for ten years
• who need to renew the benefit

These claimants will now be asked to fill in a shorter form instead of the complex 16-page document that was previously required. Face-to-face health assessments will no longer be needed, unless the claimant’s medical condition has changed.

PIP is designed to help working-age adults with an illness, disability, or mental health condition.

Claimants receive between £26.90 and £172.75 per week.

3 August – is there another interest rate rise on the cards?

The Bank of England meets again on 3 August to review its interest rate. The last time they met, they increased the rate by 0.5 percent to 5%.

This time, it’s expected to raise the rate by a quarter-point from 5% to 5.25%. This is lower than previously predicted, thanks to a larger-than-expected drop in inflation in July.

Changes to the Bank of England’s interest rate directly affect those on a variable rate mortgage and could influence the amount charged on credit cards, as well as bank and car loans. If interest rates are higher, you’ll pay more to borrow.

But it’s good news for savers as they should be getting more for their money.

16 August – next inflation date

The Office for National Statistics (ONS) will announce inflation figures for July on 16 August.

The figures reflect how much the price of goods and services has increased or decreased.

Analysts were caught out by June’s figures, with inflation falling further than predicted to 7.9% from a high of 11.1% last October.

July’s figures should also show a drop, despite food costs staying stubbornly high, as energy prices fall. 

25 August – Ofgem energy cap announced

The Ofgem price cap is set to be reviewed on 25 August. This affects how much you pay for energy.

It’s set every three months with any changes made in August impacting your payments between October and the end of December.

Currently, the average household pays £2,074 a year for energy. Analysts expect the cap to fall below £2,000.

It’s important to remember that these prices are based on average energy consumption. What you ultimately pay will depend on how much energy you use.

How you pay your bill will also affect the amount you’re charged. If you’re a prepay customer, you tend to be charged more, while those paying by Direct Debit are charged the least.

28 August – UK bank holiday

If you’re on benefits, you may get your payments on a different date due to the bank holiday at the end of August.

Anyone expecting a payment on 28 August will have it paid into their bank account on the previous working day – Friday 25 August.

That means you’ll have to make your money last longer.

The following payments are likely to be affected:

• universal credit
• state pension
• pension credit
• disability living allowance
• personal independence payment
• attendance allowance
• carer’s allowance
• employment support allowance
• income support
• jobseeker’s allowance

August (no set date) – universal credit migration

People on older benefits, such as tax credits, will receive letters through the post in August to tell them they’re being moved onto universal credit.

Universal credit is replacing:

• working tax credit
• child tax credit
• income-based jobseeker’s allowance
• income support
• income-related employment and support allowance
• housing benefit

The scheme is being rolled out in stages. Everyone should have been moved to universal credit by the end of 2024.

In August, people in West Yorkshire, Staffordshire, Derbyshire and South London will receive a letter from the Department for Work and Pensions (DWP) giving them notice of the change.

Once you receive the letter, you have three months to make the switch – or risk losing your benefits altogether.

End of August – get your school uniform grant application in

Make sure you get your uniform grant application in by the end of August so that you’re ready for when the kids go back to school in September.

If you’re on a low-income or struggling with the cost of living, you could get up to £200 to help towards the cost of school uniform from your local council.

What you get will depend on where you live and what your local council is offering.

It can be a bit of a postcode lottery, so it’s a good idea to find out what you’re entitled to and get your application in as early as possible.

In general, children who receive free school meals should be eligible. For your children to qualify for free school meals, you’ll need to be getting at least one of the following benefits:

• child tax credit
• income support
• income-based jobseeker’s allowance
• income-related employment and support allowance
• support under part VI of the immigration and asylum act 1999
• pension credit
• universal credit
• working tax credit ‘run-on’