Brits are facing higher bills this month as the cost of living crisis rumbles on. A number of changes that will affect your wallet come into force this month - and several with impact your finances from today.
The energy price cap will soar, adding hundreds to an average household's yearly electricity and gas bill, while water bills and council tax are also set to rise. The cost of dining out could also creep up this month as businesses face higher VAT rates.
However, some changes could have a positive impact on your bank account - including an increase in the minimum wage and a Council Tax Rebate for eligible households. Households in England and Wales can also start to receive grants worth thousands of pounds to replace their boilers with new heat pumps.
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Meanwhile, prescription charges are set to stay the same. Earlier this week, following speculation of another rise, it was announced that prescription charges would stay frozen £9.35 per item. It's the first time in 12 years that prescription charges have not risen annually.
Here we've outlined all of the changes that will impact your finances from today, April 1, that you should know about. Another raft of changes will be made next week, including the National Insurance tax rise and a hike on the price of stamps.
Energy Cap increase
Energy bills will rise from today as Ofgem's 54 per cent price cap increase kicks in. The energy price cap for those on default tariffs who pay by direct debit is rising by £693 from £1,277 to £1,971, while prepayment customers will see a bigger jump, with their price cap going up by £708, from £1,309 to £2,017.
The regulator has been forced to hike the energy price cap to a record £1,971 for a typical household as gas prices soared to unprecedented highs. Gas prices are around four times higher than they were a year ago.
Until now Ofgem’s price cap, which is reviewed every six months, has protected customers from the rising costs. Fuel poverty charity National Energy Action (NEA) warned the cost of heating an average home has now doubled in 18 months, leaving 6.5 million households unable to live in a warm, safe home across the UK.
The change today will add an average of £58 onto monthly bills for the typical household. Experts predict that bills could rise further, to more than £2,300 per year for the typical household in October.
Also from today, households can apply for a £5,000 grant to replace gas boilers with new low carbon heat pumps. Experts estimate that households that have switched could shave £260 off their annual energy bills from April.
Council Tax increase and Council Tax Rebate
The majority of households will be hit with an eye-watering Council Tax rise of 3 per cent from this month. The average Band D bill in England is currently £1,898 a year - up from £1,439 in 2010/11.
In Greater Manchester, every borough will see council tax hiked up.
However, some people will be eligible for the Council Tax Rebate, which has been introduced by the government in response to the cost of living crisis. Households in council tax bands A to D will be paid a £150 council tax rebate from today.
The government said the rebate will benefit 80 per cent of households in the UK. However, only those paying council tax by direct debit will receive it automatically. Those who currently pay their council tax manually are being encouraged to contact their local council to apply for the rebate.
Water Bills increase
Average household water and sewerage bills in England and Wales are set to rise from today. Formost households, bills will go up by around £7 a year (1.7%).
While the average rise of £7 sounds modest, the Consumer Council for Water (CCW) warned it will vary. Bills could rise further depending on who supplies the water, whether households have a water meter, and how much water they use.
According to industry body Water UK, the average yearly water bill in England and Wales will rise to £419 from an average of £412 last year.
National Living Wage and Minimum Wage rise
Millions of workers will receive a pay rise from today as national living wage rates increase. Around 2.5 million people will benefit from the increase, with the government claiming it will put £1,000 a year more into full-time workers’ pay packets.
The National Living Wage has increased by 6.6 per cent to £9.50 an hour for adults, while Minimum Wage has increased by 9.8 per cent to £9.18 for 21 to 22-year-olds, by 4.1 per cent to £6.83 for 18 to 20-year-olds, by 4.1 per cent to £4.81 for 16 to 17-year-olds and by 11.9 per cent to £4.81 for apprenticeships.
Bryan Sanderson, who chairs the Low Pay Commission, said: “Workers on the minimum wage care for our elderly and sick, harvest and deliver our food, and do a multitude of other tasks which help us all. Many public sector workers including for example teaching assistants will also shortly be included. They all deserve to be properly remunerated and respected as key members of our society.”
Nye Cominetti, senior economist at the Resolution Foundation, said: “This is the fourth biggest rise in the 23-year history of the minimum wage, though it is unlikely to be enough to keep up with rising prices."
The cost of dining out and other leisure
The cost of buying a pub meal, soft drink or hotel stay could become more expensive this month as VAT levels across the hospitality sector will lift back to 20 per cent. It comes after the industry saw VAT drop to 5 per cent to support its recovery during the pandemic.
VAT rebounded back to 12.5 per cent in October last year as restrictions eased, but it is now due to rise again to 20 per cent from today.
However, the lower rate did not appear to be passed on to customers, with hospitality bosses saying that the reduced tax level was used to help businesses absorb additional costs due to the pandemic.
Industry chiefs, including Wetherspoon founder Tim Martin and Young’s boss Patrick Dardis, have now said prices will have to increase significantly for customers as a result of VAT returning to lower rates.
Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), said the VAT rate increase alone is expected to cost UK pubs more than £500 million over the next year. UKHospitality boss Kate Nicholls said “might prove fatal” for business owners.
Businesses across the UK are also facing a £7.1 billion increase in business rates for the year, which could also lead to firms increasing prices to help cover higher property costs.
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