All change...
APRIL is fast approaching and so are lots of changes to your finances – some good, but some that could hit your pocket hard.
From pensions to benefits, tax to bills, here we highlight the important dates that could affect your household budget so you don’t end up getting any nasty shocks.
Bear in mind that at the same time most working-age benefits are frozen, and will stay the same in cash terms until 2020, despite rising prices, leaving many families struggling to make ends meet.
BETTER OFF
National Living Wage for over-25s increases from £7.20 to £7.50 an hour. Cap on pre-payment energy meter prices kicks in. Ofgem estimates it will save four million people £80 a year.
WORSE OFF
Council tax hike. Nearly all councils are increasing bills by up to 5%, adding around £70 a year to the average bill.
Water bills increase by an average 2%, going up to £395. Prescription charges go up 20p. TV licence goes up to £147 a year. Housing benefit for 18 to 21-yearolds is scrapped. Charity Centrepoint estimates it could make another 9,000 young people homeless.
WORSE OFF
Employment Support Allowance (work-related activity group) chopped from £102 to £73 a week for new claimants.
Universal Credit conditionality changes mean parents now expected to look for work when their youngest child turns three, instead of five. For the first time this affects those with pre-school children – an age when childcare is the most expensive.
BETTER OFF
Personal Tax Allowance increases to £11,500, and the 40% income tax rate now starts on earnings from £45,000 upwards.
ISA Allowance increases from £15,240 to £20,000.
State Pension rises 2.5%. People on the new flat-rate pension will get £159.55 a week, up from £155.65. Those on the older system will see incomes rise from £119.30 to £122.30.
WORSE OFF
Tax credits and Universal Credit benefits restricted to just two children, expected to affect almost one million families.
The ‘family element’ of tax credits no longer available for people starting a family – expected to hit four million families.
Bereavement support – government payments for families where one parent has died – slashed. Used to be for up to 20 years, now for a maximum of 18 months.
Money Purchase Annual Allowance for pension contributions chopped from £10,000 to £4,000. Could hit over-55s using the pension freedoms while continuing to work. People will need to think carefully before dipping into pension savings early.
BETTER OFF
Universal Credit taper cut from 65% to 63%. People will get to keep an extra 2p in every pound they earn.
GOOD FOR SOME – NOT OTHERS
Tax-free childcare rolls out, cutting childcare costs by up to £2,000 per year, per child. But it won’t help lower-income families receiving Universal Credit, tax credits or employer-supported childcare as they are not eligible.