All the financial changes set to hit your pocket in April – how to get prepared
APRIL is set to bring a raft of changes that could hit you in the pocket - here's what you need to know.
Spring will bring changes to energy bills, minimum wage, and council tax to name just a few - and while there are plenty of price hikes on the way, there is some good news too.
April is the start of the new tax year, which runs mid-year rather than according to the traditional calendar year.
It's often the time of year when changes are made to rules affecting your money (though not necessarily the only time).
From tax increases to bill rises, here's what you need to know about all the changes coming next month and how to prepare.
Energy bill rise
The energy price cap will rise from £1,277 to £1,971 on April 1 - an increase of nearly £700.
But this number is for the typical dual fuel bill and the exact amount you pay will depend on your actual use.
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There's very little you can do right now to reduce your bill, as switching to another provider will no longer get you the best deal.
Previously fixed deals offered cheaper prices but not any more due to rocketing wholesale costs.
In fact, some firms are being accused of touting rip-off deals that are double the price cap.
There are, however, still some changes you can make to reduce your energy usage and your bill, like turning the thermostat down or using eco wash settings.
There's also schemes, support and other help available if you're worried about your bill.
Some suppliers are offering customers deals that could work out cheaper and Martin Lewis has advised to keep an eye out for these offers.
National Insurance rise
You'll be paying more tax from April as the government is introducing its social care levy.
That means an extra 1.25 percentage points on top of the existing National Insurance rates to help cover the cost of social care.
Rates will rise from 12% on earnings between £184 to £967 a week, to 13.5%.
On earnings above this amount the rate will rise from 2% to 3.25%.
In practice that means on earnings of £10,000, you would pay £5 a year more, and on earnings of £25,000, £193 more.
How much National Insurance you pay relates to how much you earn through work, so unfortunately there's little you can do to change it.
But, it's worth checking other ways you can save on tax to beat the rise.
For instance, the marriage allowance is worth £250 to married and civil partnered couples, where one person earns less than the personal allowance.
If you're married or in a civil partnership, you can transfer your unused personal allowance to the higher earner.
But the higher earner must still be a basic rate taxpayer, meaning they can't earn more than £50,270 a year.
You can backdate your claim to include any tax year since April 5, 2017.
If you're eligible, you can as long as your have both of your national insurance number and some ID.
Here's all the ways you can claim tax back that could be worth thousands - including if you've had to work from home because of the pandemic.
Dividend tax rise
More than half a million self-employed people who pay themselves via dividends are also set to pay more.
To keep things fair between the employed and those working for themselves, the government has put dividend tax up by 1.25 percentage points too.
It applies to around 700,000 self-employed and contractors who pay themselves as a director of a limited company.
Directors of limited companies typically pay themselves a small salary up to the national insurance threshold and then take dividend payments from company profits.
They benefit from this as the tax on dividends is less than the income tax they'd pay on larger salaries.
Many freelancers, small business owners and contractors pay themselves through dividends.
The rise will see the dividend tax rate for those in the basic rate tax band rise from 7.5% to 8.75%.
For those in the higher rate tax band, the dividend tax rate will rise from 32.5% to 33.75%.
Meanwhile the highest earners tax will increase from 38.1% to 39.35%.
It means the tax paid on a £5,000 dividend will rise from £225 at the basic rate to £263, according to figures from AJ Bell - £38 more.
Again, it can't be avoided, but it can pay to check you're claiming back all the tax you could be owed.
Living wage rise
One change that could help cushion the blow of rising taxes is a pay rise if you're on minimum wage.
It's worth checking your payslip when it comes to see that the pay rise is added from April onwards.
Companies are named and shamed if they don't pay the basic amount as required by the law.
There are two types of legal minimum:
The National Minimum Wage is paid to workers under age 23 but of school leaving age, and there are different rates depending on age.
Those aged 21-22 currently receive £8.36 an hour but this will rise to £9.18 from next month.
Workers aged 18 to 20 will see the minimum wage rise from £6.56 per hour to £6.83 from April 2022.
The minimum wage is currently £4.62 an hour for under-18s but is due to increase to £4.81.
Similarly, apprentices will see the minimum rate rise from £4.30 to £4.81.
If you're older than 23, you could be eligible for the National Living Wage, which will rise from £8.91 to £9.50.
This represents a £1,000 annual increase for an employee working a 35-hour week when the new rate kicks in.
There's also the Real Living Wage, which is a voluntary minimum that some employers commit to paying and is usually higher than the official government rate.
Those earning the Real Living Wage are currently getting £9.90 per hour or £11.05 in London.
The same worker in London on the Real Living Wage would be almost £3,000 better off than someone on the National Living Wage over a year.
State pension and benefits rise
Anyone getting the state pension will see their pay rise too, by 3.1%.
The same goes for benefits like Universal Credit and Child Benefit and you can see the full list here of all the rates rising here.
While it's better than no pay rise at all, unfortunately with inflation rising at a higher rate and expected to hit as much as 8%, it might leave some worse off overall.
According to AJ Bell, because of inflation the increase in the New State Pension from £179.60 to £185.15 will actually feel like a cut to £173.04.
It means it's more important than ever to check that you are getting all the benefits you're entitled to.
You can check by using an online benefits calculator, which are offered by charities such as and
Eating and drinking out
Your fave food and drink places could start charging more from April, as pandemic help for businesses ends.
The VAT rate for hospitality companies, like pubs, bars, cafes and restaurants is returning to 20% after being lowered temporarily to 12.5% during the pandemic to help businesses through lockdown.
But the VAT jump could force some businesses to up their prices, adding more to the cost of a meal, night out or weekend break.
Unfortunately it comes at a time when costs are already high and rising - several chains and shops have already warned there will be price hikes this year.
It's never been more important to stay on top of your budget and hunt down deals.
Here's seven apps you can use to spot discounts at shops like B&M, Asda and Amazon, plus six secrets to bagging "yellow sticker" food from supermarkets including Tesco, Asda and Aldi revealed.
Income tax freeze
National insurance rates might be rising, but income tax WON'T be.
The rates are frozen for this year - and until 2026.
That means you'll pay no tax on income up to £12,570 and basic rate tax of 20% on any earnings over that amount and up to £50,270, after which it's higher rate tax of 40%.
But the freeze means that many workers will effectively pay more tax because of rising wages.
The Centre for Economics and Business Research (CEBR) has warned that more than nine million workers will pay more because of the tax freeze.
Five million lower-paid workers could have to pay income tax for the first time as a result of the measures, and another four million workers will be dragged into the higher income tax bracket.
AJ Bell says that normally these thresholds would be expected to increase broadly in line with inflation, in order to offer some protection to taxpayers.
It's worth checking your tax code to make sure you're paying the correct amount of income tax.
One Martin Lewis fan got a £465 tax rebate with just one call querying their tax code.
Capital gains tax freeze
Capital gains tax is what you pay when you make a profit on assets such as a buy to let property, art or investments not held in an Isa.
There's an allowance of £12,300 a year before it kicks - and this, too, is being frozen until 2026.
Plus, any gains you make from savings and investments in an Isa are exempt.
According to AJ Bell, it's landlords and second home owners who are most likely to be affected.
Those who are married or in a civil partnership can reduce their CGT liability by transferring assets to their spouse.
This allows you to use two lots of the £12,300 capital gains tax allowance if you have a large gain to crystallise.
That could potentially save you £2,460 in capital gains tax, if you’re a higher rate taxpayer selling shares, the finance firm says.
Elsewhere, we've rounded up the full list of benefits rising in April including Universal Credit and child benefit.
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There are also new laws to be introduced in April including changes to car tax and HMRC payments.
And council tax is set to rise by up to 5% this year - so check your bill now.
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