Let the new tax year put a spring in your budget!
Virus support is disappearing. Bills are set to get bigger. But April isn’t all bad news for your money
APRIL could well be a turning point in the pandemic as lockdown is gradually lifted following the success of the vaccine drive. But as restrictions start to disappear this month, so do the financial support measures that have been a lifeline for many in the virus crisis.
Homeowners struggling to pay mortgages and borrowers with credit or loan bills have been able to take up to six months off repayments. But that ended on April 1, and lenders can now repossess homes as a last resort if the owner does not pay the mortgage.
By the end of 2020, more than 2.75million mortgage holidays had been granted. Some 104,000 still had ongoing deferrals at the end of February this year, according to banking trade body UK Finance.
The new financial year this month also signals changes that will affect your household budget. Here, Money Mail talks you through how this month matters for your money.
HOUSEHOLD COSTS
AS CovId support measures start to be withdrawn, households are facing bill hikes. Personal finance analyst Sarah Coles, from investment firm Hargreaves Lansdown, says small changes could add hundreds of pounds to bills annually.
ENERGY BILLS: Costs are rising by £96 per year for millions of households. The energy price cap — which is based on a typical customer’s usage and sets the maximum price suppliers can charge for electricity and gas — has been hiked to £1,138 a year. The cap applies to the 11 million households on a supplier’s default tariff. A further 4million households on prepayment meters will also see bills rise by £87 to £1,156. Ms Coles says: ‘You can very easily wipe out that £96 increase by shopping around on comparison sites and changing your provider.’
TV FEES: With everybody staying indoors during the pandemic, more of us have switched on the television. But streaming services have hiked their prices. The new Tv licence fee came into effect on April 1, with households paying £159 for a standard colour licence — up £1.50 from last year. Netflix said last month its standard monthly package was increasing from £8.99 to £9.99. Rival site disney+ also announced a rise of £2 to £7.99 a month. COUNCIL TAX: All 32 local authorities in Scotland have frozen council tax rates for this year after an incentive from the Scottish Government which sees them receive a cash equivalent of a 3 per cent tax increase.
The move was welcomed by parties at Holyrood, but concerns remain over the financial pressures on councils.
Households in England and Wales will see their council tax bills jump by around 4.4 per cent on average.
This will vary by council, but a typical Band d property will see the levy rise to £1,898 per year — up £80 on last year.
WATER BILLS: These have, on average, fallen by £2 to £408 per year. But this is not the case in all areas: Thames Water, for example, has increased prices by £14 a year. Some households could beat this hike by switching to a water meter.
PRESCRIPTION CHARGES: In England, these will rise to £9.35 — up 20p. Prescriptions are free in Scotland.
HIGHER ROAD TAXES: This will hit some motorists this month, depending on their car’s Co2 emissions.
drivers with cars generating between 76g and 150g per km of Co2 will see a rise of £5 this year — taking their annual road tax bill to £220.
BUDGET BOOSTER
THE STATE PENSION: This rose by 2.5pc yesterday. The full level of the flat-rate scheme for those who reached state pension age from April 2016 will rise to £179.60 a week, up from £175.20.
The full basic state pension payable to those who reached the required age before April 2016 rises to £137.60 a week from £134.25. Pension Credit is also rising to £177.10 — up from £173.75.
PERSONAL TAX ALLOWANCE:
Changes are now in effect, as the new tax year has begun.
The personal allowance — the amount you can earn before paying tax — has risen by £70 to £12,570 in this tax year. This allowance starts to reduce when you earn more than £100,000 a year.
The threshold for when you pay the 40pc higher rate tax has also risen from £50,000 to £50,270 in England and Wales.
But Chancellor Rishi Sunak said in last month’s Budget that these levels will be frozen for the next five years — meaning household spending power will be reduced as earnings rise with inflation.
THE MARRIAGE ALLOWANCE:
Allows your spouse or civil partner to transfer their unused personal allowance to you, if you are a basic rate taxpayer — rises £10 to £1,260. This is worth £252 in saved tax, up from £250 last year.
CHILD BENEFIT: Rising to £21.15 a week for the first child and £14 for others from April 12, an increase of 10p and 5p respectively. The benefit is paid to families with children up to the age of 16 — or 20 if they are in full-time education or registered on a government-approved course. Benefits, in general, are rising by 0.5 pc.