Millions of households are braced for a £400 a year bill shock from next month.
Increases in everything from energy and water to council tax, broadband and mobile prices will land all at once. That is before other bills shoot up too, including road tax, where some drivers will be hit with a huge jump. Elsewhere, TV subscription and stamp prices are both going up yet again, while shop price inflation could pick-up if retailers pass on higher costs. Offsetting some of the pain for some will be an increase in the minimum wage and benefits.
Next month’s increase in energy, water, and council tax alone will add £342 to the typical household’s outgoings, taking the combined bill for all three to more than £4,700 on average over the next 12 months. Assuming the same household has broadband, two mobile phone contracts and a TV licence, they will have to find another £400 a year overall.
Yet it came as debt experts warned of the pressure many households are already under. Charity StepChange revealed that almost three in 10 of those coming to it for help have more going out in bills every month than they have coming in. The average deficit is a worrying £532 a month, threatening to compound a battle to keep their heads above water, and 15% higher than two years ago. This is despite falling inflation and a supposed lessening in the cost of living crisis.
Richard Lane, chief client officer at StepChange, said: “While headlines suggest the cost-of-living crisis is easing, for many households, the financial pressures that pushed them into difficulty haven’t gone away. April’s bill increases will only make things tougher. Council tax is set to rise by 5% for most – and even more in some parts of the country.
”Many people will also face increases in their other essentials as the energy price cap rises and water companies increase bills. With housing costs still painfully high, these increases will stretch already strained budgets even further.” He added: “At StepChange, we see the impact of this every day. The hardest-hit households are seeing their monthly budget deficits grow. More than a quarter of our clients say the cost-of-living crisis is the reason they’ve fallen into debt.”
Grace Brownfield, from the Money Advice Trust, the charity that runs National Debtline, said: “There is little let-up in sight for many struggling households. We are already seeing the effect that high prices have had. Energy arrears are now the second most common debt we’re helping people with at National Debtline, behind only credit cards, and a third of people we help have council tax debt.”
Next month’s increases will compound the impact of other punishingly high essential bills. Officially, inflation has crept back up to 3% – yet many feel prices are rising much faster. A Bank of England survey showed the average person thought inflation was nearer 5%, although they did expect it to drop over the coming year.
And there is unlikely to be a reprieve for borrowers next week, with the Bank of England expected to freeze its base rate at 4.75%. Mortgage borrowers coming off cheap deals are desperately hoping for a reduction to soften the blow. In the Bank of England survey, 31% of respondents said it would be better for them if rates fell, but 26% said they should actually rise. Those renting continue to endure big increases. Average private rents increased by 8.7% in the 12 months to January.
While bills are rising, millions of households will also get a boost to their incomes from April. The National Living Wage for workers aged 21 and over will increase by 6.7% to £12.21 an hour. Inflation-linked benefits and tax credits will rise by 1.7%, while the triple lock means the state pension will increase by 4.1%. However, a freeze on income tax thresholds will mean more people are “dragged” into paying tax, or into paying at a higher rate.
Some of the April price rises:
Energy bills – up £111
Energy regulator Ofgem’s price cap will jump by 6.4% from April 1 – more than was feared and increasing a typical annual bill by £111 to £1,849. Around 22 million customers will be affected, including four million on prepayment meters. The exact amount you will pay depends on how much gas and electricity you use. This is because the price cap does not limit households’ total bill, instead, it sets the maximum that can be charged for unit rates of gas and electricity, as well as the standing charges. While the average annual rise is £111, the cap is reviewed every three months, meaning the figure will change.
What can you do?
There are plenty of fixed rate deals available that are cheaper than the price cap. Some offer savings of up to £179 per year versus the April cap. It is the unit rates of energy that are fixed, not the overall bill.
And you have to keep in mind that Ofgem’s cap could also fall later this year. Wholesale gas prices have come down in recent weeks and could drop further if there is a peace deal in Russia’s war on Ukraine.
Water bills – up £123 a year
Unlike energy, households have no choice over who they get their water services from, which is why many will find a surge in bills next month so galling.
Average bills will leap by up to 47%, leading to calls for urgent help for customers already struggling. Some suppliers will hike prices by as much as £224 a year, in the biggest wave of hikes since privatisation 36 years ago. The average household water and sewerage bill in England and Wales will jump by 26%, or £123 a year, to £603. Suppliers argue the big increases are needed to carry out long overdue investment work to fix leaks and sewage discharges.
What can you do?
A scheme called WaterSure is designed to help certain people with their bills. You must be on benefits and need to use a lot of water, either for medical reasons or because your household has a certain number of school-age children. You also need to be on a water meter or be waiting to have one installed.
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Council tax – up around £108
Most local authorities in England with responsibility for delivering social care are expected to increase council tax by the maximum 4.99% from next month.
Recent analysis by the PA news agency of 139 councils that have proposed or confirmed increases showed 85% plan to enforce the upper limit. Six councils in acute financial stress will be allowed to raise the tax by more than 5%, including Bradford which can hike it by 10%. Some cities with mayors can also add a separate levy that covers funding other services.
The average council tax in England rose by £106 to £2,171 a year last April. The government has yet to publish the average for this year. But while it is only a rough guide, a 4.99% rise would take the average Band D property up another £108 to £2,279.
What can you do?
If you’re on a low income or receive certain benefits, you can get help from your local council when paying your council tax bill – this is known as Council Tax Reduction or Council Tax Support.
TV licence – up £5 a year
The cost of a colour licence will rise from £169.50 to £174.50 a year from April 1. A black and white TV licence – for those who have one – will also rise from £57 to £58.50 a year You need a TV licence to watch live TV or any shows on BBC iPlayer. Those caught watching live TV without a TV licence, you can be fined up to £1,000.
If you are blind or severely sight impaired are still able to apply for a 50% concession. This means a colour licence will cost £87.25.
There are other concessions and arrangements available, including for people living in certain types of residential care and for over 75s receiving Pension Credit.
What can you do?
The Simple Payment Plan is designed for those in financial difficulty.
Customers who qualify can choose from either a fortnightly or monthly payment plan to spreads the cost of a licence over 12 months.
Broadband and mobile prices – up an average £54 a year
Many people with a mobile contract, or a home broadband contract, will see prices rise from March 31.
They used to be linked to inflation, which meant some huge increases in previous years. Recent changes mean that those signing up for a new contract should be told in “pounds and pence” how much the cost will rise by each year. But those on older contracts could still be landed with an above inflation rise.
BT says customers who took out a contract before April 10 last year will see a price increase of 6.4% form March 31. Price comparison website Uswitch says broadband prices in general will increase by an average £21.99 a year for those on inflation-linked contracts, and £15.90 a year for a typical mobile customer. That would add nearly £54 a year for a household with broadband and two mobile contracts. Households will have to find even more if they have TV subscriptions, with Sky and Virgin Media both upping prices.
What can you do?
More than nine million Brits are out of contract on their broadband package and 33 million on their mobile plan, Uswitch says. It calculated that moving to a new broadband deal could save a household £181 a year. Mobile customers can also text ‘INFO’ to 85075 to find out if they are still in contract and any exit fees associated with leaving early.
Car tax – varies greatly depending on vehicle
Millions of car drivers will see their car tax rise from April 1 – in some cases rocketing.
The biggest change will be for electric cars, which haven’t had to pay vehicle excise duty until now. Electric, zero or low emission cars registered from April will now pay £10 for the first year, but that will leap to £195 a year (as it stands) for the next five years. Those registered between April 2017 and now will pay £195. But if they were registered before that, and after March 2001, the tax will be just £20 a year.
It gets even more complicated, as new electric vehicles costing £40,000 or more will pay a £425 a year “luxury car tax” – expensive car supplement – from the second to sixth year of the vehicle’s life.
Owners of other types of cars, including petrol and diesel, will also pay more. Vehicles are split into bands, depending how much CO2 they emit and the year they were manufactured. Cars emitting between 1g and 50g of CO2 per kilometre will go from paying £10 to £110 for the first year. At the other end of the scale, the road on brand new gas-guzzler churning out more than 255g/km will double from an already hefty £2,475 to £5,490. For the second year onwards – and for cars registered after April 2017 – the tax will rise £5 to £195 a year. Rates will also rise for cars registered before 2017.
What can you do?
If you’re thinking of an electric car, now would be a good time to get one. Those registered before April 1 won’t have to pay the expensive car supplement. To spread the cost, you can set up a direct debit with DVLA online, allowing you can spread the cost by monthly over six monthly.
Stamp prices – increase depends on usage
The cost of a first class stamp will rise another 5p to £1.70 from April 7, marking the sixth price hike in three years. And second class stamps will be 87p, a 2p rise. Royal Mail blamed the increases on a combination of fewer letters being sent and a rise in the number of households it delivers to, driving up costs.
What can you do?
If you use a lot of stamps then stock up in advance and bulk buy. As long as the stamp doesn’t have the price on it, but just the class, it will still be valid.
Other bill rises
Stamp duty
From next month, home buyers in England and Northern Ireland will start paying stamp duty on properties over £125,000, instead of over £250,000 at the moment. First-time buyers currently pay no stamp duty on homes up to £425,000, but this will drop to £300,000.
Shop prices
Inflation has already begun to tick back up again, and there is concern it could be driven even higher by businesses passing on a hike in employers’ national insurance from April. The shake-up, announced by Chancellor Rachel Reeves in her Autumn Budget, will cost companies an estimated £25billion a year. Business lobby groups claim some firms, including retailers, will be looking to pass some of that on through higher prices. Quite how much is too early to tell.
Planning application fees
While affecting far fewer people, households putting in a planning application for certain home improvements and renovations in England will notice a rise in fees, in some cases doubling. Scotland is expected to follow suit later this year. For those home owners putting in an ordinary application for an extension, the cost is going from £258 to £528. The justification is to allow local authorities more resources to speed up the planning process.
HMRC interest rates
Another change that has gone under the radar could have a costly impact on self-assessment taxpayers, businesses and others already struggling to meet their tax bill. The interest rate charged on any late tax had been 1.5% above the Bank of England’s base rate, but that will jump to 4% above.
Rail fares
Next month’s increases come after millions of train travellers were hit with price hikes at the start of March, including for rail cards and season tickets across the country. As part of annual price changes, regulated fares in England will increase by an inflation-busting 4.6%. And most rail cards will go up for the first time in 12 years, some by almost 17% from £30 a year to £35. Last month the fare cap on bus travel in England jumped 50%, from £2 to £3.
