There are a host of big tax, allowance and bill changes on the way in April, which could mean pocketing slightly more money or spending that bit more. Here’s a round-up.
Some of the big April money changes have been in the pipeline for some time, while others are fresh policies announced at last week’s Spring Budget.
But once you’ve absorbed all of the changes, will you be better or worse off?
Employees and self-employed workers
The National Living Wage will rise to £11.44 per hour (up from £10.42) from 1 April, and the age threshold will fall from 23 to 21.
The main rate of employee National Insurance (NI) will reduce from 10% to 8% from 6 April. This reduction, followed by the 2p cut in the Autumn Statement, means the average worker on a salary of £35,400 will save £900 per year.
NI rates will go down for self-employed workers too – following the 1p cut in the Autumn Statement last year. From 6 April, the main rate of Class 4 National Insurance Contributions (NICs) will go down to 6%, after standing at 9% the year before.
However, tax thresholds will remain frozen in 2024/25 – the personal allowance will stick at £12,570, the higher-rate threshold at £50,270, the inheritance tax nil rate band at £325,000, and the residence nil rate band £175,000. This ‘fiscal drag’ means many people will be paying more tax as a result.
Billpayers
Average energy bills are to fall by £238 per year from April as the Ofgem energy price cap will reduce from £1,928 per year to £1,690. This will take monthly bills down from about £160 to £140. However, the amount you’ll pay will depend on how much energy you actually use.
The majority of local authorities responsible for social care in England have indicated they’ll raise council tax by the maximum allowed.
Councils are able to raise this tax by 3% plus another 2% for social care without holding a referendum. This means council tax for a band D property could rise from an average £2,065 to £2,168. That’s over £100 more.
Sarah Coles, head of personal finance at Hargreaves Lansdown, says: “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.
“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.”
If you have pay TV, broadband or a mobile, chances are you’ll be paying a lot more come April. In fact, 11 million broadband and 36 million mobile customers will see inflation-linked price increases, with billpayers forced to fork out an extra £27.19 and £24.23 annually. If you’re out of contract, you can walk away penalty-free, however. There are also other ways to beat the April price hikes.
Elsewhere, the standard colour TV licence will cost £10 more, setting you back £169.50.
However, Coles said: “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.”
Water bills are also set to rise 6% in England and Wales – up £27 and 8.8% in Scotland, or £36.
The bill hike means the average household water bill will be £473 per year in 2024/25.
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.
Leaving a bad taste in your mouth are the April dental care fees, which are set to rise 4% in April. This means a band one course of treatment, which includes a basic check-up and diagnosis, will rise £1 to £26.80.
Parents and carers
As part of the first wave of the “largest-ever expansion of free childcare in England”, parents can sign-up for 15 hours free childcare for two-year-olds from April.
This then expands to the following:
- September 2024: Up to 15 hours for eligible working families in England with a child between nine and 23 months old.
- September 2025: Up to 30 hours for eligible working families in England with a child from nine months old up to school age.
Meanwhile, in a major shake-up to rid the system of “unfairness”, Jeremy Hunt confirmed the High Income Child Benefit Charge (HICBC) £50,000 threshold allowance will rise to £60,000 this April.
Drivers and drinkers
Fuel and alcohol duty will be frozen at the current rate (52.95p) for another 12 months. The 5p fuel duty cut introduced in March 2022 will continue, saving drivers £50 next year, and £250 in total. As well as the freeze, the planned inflation increase for the next tax year will also be scrapped.
However, the standard car tax charge has risen with Retail Price Index (RPI) of 10.1% – from £165 to £180.
In last year’s Autumn Statement, Hunt said he had “listened to defenders of the great British pint” and froze alcohol duty until 1 August 2024. That duty freeze will be extended to 1 February 2025, and the decision aims to “support the hospitality sector and help consumers with the cost of living.”
Homeowners and businesses
The furnished holiday lettings tax regime will also be scrapped from April, which is forecast to raise £245m per year.
The furnished holiday let regimes means that landlords can claim Capital Gains Tax relief for trades, they are entitled to plant and machinery capital allowances, and products count as earnings for pension purposes. They can also deduct mortgage interest payments from rental income.
During the Spring Budget announcement, Hunt said he had been “looking closely” at this and was concerned it was “creating a distortion, meaning there are not enough properties available for long-term rental by local people.”
Elsewhere, in a bid to support small businesses, the VAT registration threshold will increase from £85,000 to £90,000 from 1 April 2024. An estimated 28,000 businesses are expected to benefit in 2024/25 from no longer being VAT registered.
Savers, borrowers and pensioners
As already confirmed, the dividend allowance will halve from the current £1,000 to £500 on 6 April 2024.
This will hit anyone earning dividends on investments held outside of 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. It’s one reason why investors are rushing into ‘Bed and ISAs’ to shield their earnings from tax.
The state pension will also rise by 8.5% in April 2024, adding £902.20 or £691.60 per year to payments for 12.6 million people, depending on when they retired.
For those who retired before April 2016 and who are in receipt of the basic state pension, the pay will rise from £8,122.40 per year (£156.20 per week), to £8,814 (£169.50 per week). This is an extra £13.30 per week.
For those who retired after April 2016, the current state pension is £10,600.20, but this will rise £900 to £11,502.40 – £221.20 per week, up from £203.85, adding an extra £17.35 per week. It comes after the Government committed to protecting the pension triple lock.
In a bid to support households struggling with problem debts, the Government confirmed at the Spring Budget that it will make it easier to access a Debt Relief Order (DRO). DROs are a personal insolvency debt solution for individuals who can’t pay their debts. The £90 administration fee for a DRO will be removed from 6 April 2024.
