Well we're in April now and it's going to be tough month of price increases with everything from energy bills and water bills to taxes seeing increases.
Rising Energy and Utility Bills
The new energy price cap is set to increase by 6.4 percent with the average annual cost for a typical household expected to reach about £1,849. The increase is driven by both market forces and regulatory adjustments made by OFGEM, with changes in global energy markets now pushed on down to domestic consumers.
Water bills are also on the rise, averaging a 26 percent increase across the board. In some regions, particularly where the water infrastructure is under strain or where tariff structures base charges on property rateable values rather than actual usage, increases have been reported to reach as high as 47 percent.
Household bills for stuff like broadband, mobile phones, and TV licences are also going up. Expect to see increases of up to 7.5 percent. OFCOM (the regulator for telecoms) has regulated price hikes for new broadband contracts, but legacy contracts with older pricing structures will be affected.
Council Tax
Council tax is once again on the way up, this time most local councils are expected to raise rates by the maximum allowed increase of roughly 4.99 percent. Some have even been granted approval to raise rates beyond this cap. With the changes the average Band D bill could soon exceed £2,200 annually. In Wales and parts of Scotland, these increases are even more pronounced, with rates potentially rising by 15 percent.
New Tax Year Brings Tax Changes
One of the most significant changes is the continuation of income tax thresholds being frozen until at least 2028. We've discussed this in detail before but freezing tax allowances and thresholds while salary levels naturally increase over time means a larger proportion of earnings will be subjected to higher rates of taxation. You can calculate how you've been subject to increased tax via 'stealth taxes' by calculating the effects of frozen tax thresholds on your pay.
For example, an employee whose salary increases from £45,000 to £50,000 might now face portions of their income falling into the higher tax band, largely due to the unchanged thresholds. This phenomenon is referred to as fiscal drag and effectively of increases the tax burden without actually raising tax rates.
Employer National Insurance contributions, which are currently at 13.8 percent, will also see rise to 15% from April 6th. The threshold at which these contributions are levied is also being reduced. Calculate the effect of the employers NIC rise. The changes means that companies, particularly those with a larger workforce, will see increased staffing costs. There is some relief being provided though in the form of the Employment Allowance. This is being increased from £5,000 to £10,500 and the upper limit for being eligible for claiming has been removed.
Capital gains tax went up straight after the October 2024 Budget. The current rates increasing to 18 percent for basic rate taxpayers and 24 percent for higher rate taxpayers regardless of asset type. In addition, the annual Capital Gains Tax exemption remains lower than in previous years. It's been falling since 2022/2023, a peak of £12,300. It's now just £3,000.
Stamp duty will see thresholds significantly reduced. You can use our Stamp Duty Calculator to get a quick calculation. First-time buyers, in particular, will feel the pinch with the threshold dropping from £425,000 to £300,000. Homemovers (not first time buyers) will now be liable for stamp duty on properties valued over £125,000 rather than £250,000.
Government Benefits
So far it's been all rises but the government has announced a series of benefit adjustments aimed at easing the burden on the most vulnerable.
Child Benefit is set to increase from £25.60 to £26.05 per week for the eldest or only child, and from £16.95 to £17.25 for every additional child. Modest changes working out to an extra £50 to £60 per child annually.
Universal Credit, which is claimed by around four million people will see annual payments rise by around £420 on average by 2029-30.
The National Living Wage will increase from £11.44 to £12.21 per hour for workers aged 21 and over. These changes affect three million employees and are a significant increase over previous years. Calculate your wage increase by using our minimum wage calculator
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