Yahoo Finance How much more you need to pay on bills and travel from April
April has worked hard to earn its reputation for being awful — ushering in a range of price rises to squeeze us even harder with each passing year. So it comes as a welcome change that we have good news to celebrate this year — with energy bills falling £200. But, unfortunately, our costs are still set to rise.
In fact, the energy price cap will fall to £1,690 — down 12.3% — saving the average household £238 a year, or £20 a month.
However, before we start boiling the kettle for a celebratory cup of tea, there’s bad news too. Arrears on energy bills have passed £3bn, and regulator Ofgem is allowing providers to add up to £28 a year, in order to cover these costs — eating into our savings.
It’s also important to see this in context. When it was first introduced in 2019, the cap was £1,179 — even before it was cut during lockdowns — so the new cap will be 43% higher than this.
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Meanwhile, we’ll be wrestling with a host of other price rises.
1. Tax on investments — possible cost £769
The dividend tax allowance falls in April from £1,000 to £500. This will hit anyone earning dividends on investments held outside tax wrappers — as soon as they exceed the new smaller allowance. It will also affect anyone who owns their own company and pays themselves in dividends.
Investors face capital gains tax misery too. This is paid on any profits you make on investments. The annual allowance is slashed from £6,000 to £3,000 in April.
Investors can protect themselves from both by selling assets and making gains within their capital gains tax allowance this year (£6,000), and then using the "bed and ISA process" to move up to £20,000 into an ISA. After the end of the tax year on 6 April, they can do the same again, although they’ll need to stay within the lower capital gains tax allowance. Married couples can share assets and both use their allowances, so by the 6 April, between them, they could have protected another £80,000 in ISAs.
Cost calculations
If you earned just over the higher rate threshold, and made a capital gain of £6,000 on shares in the current tax year, there would be no tax to pay. If you made the same in the next tax year, you’d pay 20% tax on £3,000 — £600. If you earned just over the higher rate threshold, and made £1,000 from dividends in the current tax year, there would be no dividend tax to pay. If you made it next year, you would pay 33.75% on £500 — £169.
2. Council tax — possible cost £103
Councils have the freedom to raise tax by 3% — plus another 2% for social care — without holding a referendum. It means band D council tax could rise from an average of £2,065 to as much as £2,168 — £103 more.
You may be able to get a discount. If you live alone, you can get the single person discount of 25%. Some people are "disregarded" when you’re calculating how many people are in the house. This includes under 18s and students, so check you’re not paying for anyone you shouldn’t.
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You might also be paying too much because you’re in the wrong council tax band. If it turns out that the government valued your property too highly for tax, you could end up paying lower bills — and get a refund into the bargain. Challenges don’t always work though, and can even mean your bill ends up even higher, so you need to do some legwork first.
3. Water bills — possible cost £27
There’s pain to come from water bills, which are set to rise 6% in England and Wales — up £27 — and 8.8%, or £36, in Scotland.
If you’re trying to cut costs, it’s worth considering a water meter. As a rough rule of thumb, a normal user with more bedrooms than people in the house — or the same number — could be better off with a meter so they only pay for the water they use. It also gives you the opportunity to cut your water use and save money.
4. Broadband and mobile — possible cost £53
Mid-contract hikes are on the way for the customers of a number of broadband and mobile companies.
When you signed up, the small print would have said if the company reserves the right to hike the price mid-contract, and by how much. Most of those that do, link to inflation in December or January, plus around four percentage points. They then hike the price in March or April. It means you could be facing a rise of around 8%, and as much as 8.8%.
If you’re out of contract, the fact that the best deals tend to go to new customers mean it’s worth shopping around. If you stay with your existing provider, check for the cheapest deal elsewhere, then contact them, tell them you’re thinking of leaving, and ask them to match the price.
Cost calculations
This is based on broadband costing £25 a month, a mobile contract costing £30, and an 8% price hike, adding £4.40 a month or £52.80 a year.
5. Car tax change — £15
The standard car tax charge has risen with RPI of 10.1%, up from £165 to £180.
6. TV Licence — £10.50
The standard colour TV licence will rise to £169.50, up from £159.
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Not everyone has to pay a TV licence fee, including those who claim pension credit. It’s one of the most underclaimed benefits in the country, and opens the door to a number of other cost savings, so is worth considering, even if you’re only entitled to a small payment.
7. Air passenger duty — possible cost £8 for a family of four with a return flight in Band B
The domestic band will rise from £6.50 to £7 for economy and from £13 to £14 for business.
Band A (up to 2,000 miles) will remain the same. Band B (2,000 to 5,500 miles) will rise from £87 to £88 for economy and from £191 to £194 for business, Band C (over 5,500 miles) will rise from £91 to £92 and from £200 to £202 for business.
Sarah Coles is a personal finance analyst at Hargreaves Lansdown and co-presents Switch Your Money On podcast.
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