Energy bills to council tax: 7 costs set to rise next month – and how to battle them
April is the cruellest month – when a whole series of price rises kick in, making life more difficult and expensive for all of us. Fortunately, there are things you can do to keep your costs down, so you stand a better chance of staying on top of your finances.
This could have been a lot worse. We were initially set for our bills to rise by a fifth in April, but the hike has been cancelled, and the energy price guarantee will stick at £2,500 until June. From that point, we’re expecting the energy price cap to drop to £2,100 – so our bills will finally fall back a little. However, there’s still some bad news to get to grips with, because after March we’ll lose the £67-a -month rebate that the government has been funding over the winter – so we’ll all be worse off.
At the moment there’s nothing to be saved by shopping around; the only answer is to cut energy use wherever we can. Unfortunately, 57% of people are already trying to use less energy at home, and still half of us are finding it difficult to pay our energy bills. If you can’t see any way of using less, you may be able to get some help. It’s worth checking whether you qualify for a non-repayable grant from your supplier or for the Household Support scheme in England run by your local council.
Read more: Childcare, pensions, tax, benefits — the key takeaways from budget
2. Council tax
Councils have the freedom to raise tax by 3% – plus another 2% for social care – without holding a referendum. The Treasury expects around 95% of them to do so. It means band D council tax could rise from an average of £1,966 to as much as £2,064. We’re going to feel this even more keenly because we aren’t getting a £150 Council Tax rebate this year either.
If you live alone, you can get the single person discount of 25%. There are also discounts for those with conditions like Alzheimer’s, some full-time carers for people with disabilities on specific benefits, and people on pensions credit. The discount will depend on who lives in the house, so it’s worth checking what you could get on the government website Apply for a Council Tax discount – GOV.UK (www.gov.uk).
You might also be paying too much because you’re in the wrong council tax band. When these were set, so many properties were valued at the same time that some mistakes were made. If it turns out that they valued your property too highly, you could cut your bills and get a refund. However, challenges don’t always work, and in the worst case, they can mean your valuation is raised, so you end up paying more. It means you need to do your research first.
Read more: Tax hikes: Why it is time to rethink the way you save and invest
3. Water bills
Water bills will rise by an average of £31 in England and Wales and £19 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. Mobile and broadband
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 plus a few extra percent. It means you could be facing a rise of anything up to 17%. If you have finished the minimum contract period, it pays to shop around for the best possible deal – and check the small print for these potential hikes in future.
Read more: Don't miss you chance to boost your state pension
5. Prescription charges
These are going up by 30p to £9.65. The price of medicines can really add up, so if you regularly get more than three prescriptions a month, you’re better off with a pre-payment certificate. These last for three months or a year, and once you’ve paid for them, all your prescriptions are included. The price of these is also rising. The three-month pre-payment certificate will go up by £1 to £31.25 and the 12-month one will rise £3.50 to £11.60. However, it’s still a cheaper option.
Read more: How to enjoy a tax-free income
From 3 April, first class stamps will rise 15p to £1.10 and second class stamps will be up 7p to 75p. It’s no wonder so many people are considering whether they really need to send anything through the post. But if you do, you might want to get some 1st and 2nd class stamps in before the price rise.
7. Tax on investments
The dividend tax allowance (the amount you can get before you pay tax) falls in April from £2,000 to £1,000 – and will halve again the following April. This will hit anyone earning dividends on investments held outside of tax wrappers and 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 £12,300 to £6,000 in April – before being halved to £3,000 the following April. You can protect yourself from both by holding investments in an ISA.
Read more: How to avoid an inheritance tax bill
It’s no wonder they’re calling this another ‘Awful April’, but it’s worth knowing that in among all the misery there is a spot of good news. Those who rely on pensions or benefits to make ends meet will get a rise of 10.1%, while those on the National Living Wage will see it increase 9.7% to £10.42 an hour. Of course, you’ll need every penny to cover rising costs, but at least there’s something positive to cling onto.
Sarah Coles is a personal finance analyst at Hargreaves Lansdown and co-presents Switch Your Money On podcast.
Watch: How to save money on a low income
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