Act fast for government cash breaks

Experts expect a surge of activity in the next few months as consumers rush to benefit.

Richard Dodd of the British Retail Consortium said big-ticket items such as fridges and washing machines are expected to sell well alongside Christmas products this year.

"Normally, we would expect people to think about these household goods after Christmas," he said.

Steve Fowler, editor of What Car? magazine, also expects a big rush of new car buyers before the end of the year. "I would not leave it too much longer if you want to take advantage of the scrappage scheme," he said.

Motorists have also been hit by last week's 2p rise in fuel duty - a measure that was delayed from last October amid concerns about the high price of fuel. A further increase of 1p a litre is planned for April next year.

Here we look at how to take advantage before the end of the year:

HOME IMPROVEMENTS

The Federation of Master Builders is encouraging homeowners to finalise arrangements with builders now to avoid paying the higher Vat rate.

Vat was cut to 15% from 17.5% until the end of the year to help stimulate consumer spending. Though the difference is small for most purchases, it could mean as much as £1,250 on a £50,000 home extension.

If you are making payments in stages, each instalment will have its "Vat point", when the tax is due. If the final payment is in 2010, you will have to pay the higher rate.

If a schedule of works has been agreed with your builder, with the final payment due next year, you will not be able to bring this forward as it would fall foul of tax avoidance rules.

However, if you are planning a project now, you may be able to negotiate early payments, although this potentially puts you at risk if there is further work to be carried out after the payment is made. The building firm may also have to justify the early payment to tax inspectors.

Builders can either send you an "application for payment" or a final invoice. With the application, the Vat point occurs only when the customer makes the payment. It means that if you are sent an application in December but fail to pay until the new year you will be charged at the higher Vat rate.

With an invoice, however, the Vat point is set at when the invoice is issued. If there is a delay in the building work so the final bill is issued in 2010, you may be able to argue against paying the higher Vat rate.

The federation said: "It would largely depend on who was to blame for the delay. If it was because the builder failed to carry out work as planned, you may have a case. If, on the other hand, the delay occurred because of changes you made to the plans, you may be liable instead."

VAT ON NEW CARS

Drivers looking to buy a new car to tie in with this month's new number plates may have to pay a higher Vat rate while missing out on the scrappage allowance.

Many new cars - which are made to order - will not be delivered for months. Richard Sanders of drivethedeal.com, an online dealership, suggests an average delivery time of 12 to 14 weeks, meaning you should order as soon as possible if you want your car before January.

Bills for new cars are usually settled on delivery of the vehicle. If this occurs in January, the higher rate of Vat is applied. On a £25,500 Audi TT, that's an additional £637.

Those looking for smaller cars face the longest delays. Some models already have January delivery times. These include the Vauxhall Agila, VW Polo Fox and the Ford Ka, according to Eurotax Glass's, the car buyer's guide. These typically cost £8,000 or less, so you save £200 with Vat at 15%.

The best way to ensure you get your car delivered on time is not to specify extras. "Go for a standard model with standard paint," said Sanders.

Funds for the scrappage scheme will also run out by the end of next month, according to official data. Figures from the Department for Business show 185,273 orders for scrappage have been made, so £185m of the £300m set aside by the Treasury has been allocated.

The department said about 12,000 orders are made each week so the current allocation may run out by the end of October - and that's not taking account of an expected boost in applications this month for the new number plates.

STAMP DUTY

Stamp duty on properties valued at up to £175,000 has been waived until the end of the year but analysts at Abbey suggest up to 35,000 people may miss out. Previously, any property worth more than £125,000 incurred a 1% charge on the entire value.

House purchases typically take at least three months, which means the effective deadline for mortgage applications is the end of this month if you want to benefit. If the sale occurs in January, buyers face an extra bill of up to £1,750.

Richard Morea of L&C Mortgages, a broker, said: "If you are planning to buy, this is a good time. House prices are 20% lower than they were at their peak and recent data suggests they are stabilising or rising."

FUEL DUTY

Last week's 2p rise in fuel duty marks the start of a series of increases for the next three years. Under present plans, fuel duty will rise by a further 1p in April. The increase comes as petrol prices hit a recent high of 105p a litre.

Help is at hand, though. If you have either an Apple iPhone or a Google Android smartphone, you can download a program called Fuel Prices UK, which helps locate the cheapest fuel in your area. The application was launched last week by an outfit called Mubaloo. The built-in GPS function of the smartphones allows users to see their position on a map and the application plots the position of the five cheapest petrol stations in a given area. It will then give directions to the one they select.

The difference between the highest and lowest price for fuel in Britain is 14p, according to petrolprices.com - meaning a potential difference of £291 over a year for a typical driver.

The application is available for download for a £4.99 annual subscription.