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Why April is a big month for your finances

Why April is a big month for your finances

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A host of changes that affect your finances take effect in April, which mean that some planning may be needed especially when finances are stretched by the Covid crisis.

Some household bills and taxes are changing, either on 1 April or 6 April, the latter of which is the start of the new tax year.

Among the moves are some specific to Covid, such as an end to the ban on home repossessions.

Others mean the price of key household utilities will rise.

What Covid support measures will change on 1 April?

Some of the support measures in place during the coronavirus pandemic are starting to be withdrawn.

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The City regulator, the Financial Conduct Authority, said that mortgage lenders could now enforce repossessions of homes from borrowers unable to make repayments. These were paused during the Covid lockdowns. Despite the restart, lenders must adhere to strict guidance on when to repossess and only use it as a last resort.

Those struggling to make repayments can no longer apply for a deferral on mortgage, loan or credit card repayments, although lenders can and should still deal with individual customers based on their specific financial circumstances, particularly by protecting the vulnerable.

For buyers, applications for a new Help to Buy scheme in England are now being accepted. This is a less generous version than its predecessor and is restricted to first-time buyers.

What household bills will change from 1 April?

Sarah Coles, personal finance analyst at investment form Hargreaves Lansdown, has listed some of the key changes and encouraged people to shop around for a better deal.

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Council tax bills in England and Wales will rise. This will vary by council but increase by an average of 4.4% to £1,898 for band D properties – an average increase of £6.75 a month. There are no increases in Scotland.

The energy price cap is rising, which means default tariffs for 11 million people go up by £96 a year to £1,138, based on a typical customer’s usage. The bill is still determined by the amount of energy used.

Prescription charges will rise 20p to £9.35. A 12-month prescription prepayment certificate (PPC), which covers all prescriptions for a year, will rise from £105.90 to £108.10.

The cost of a standard colour TV licence will rise £1.50 to £159. Some streaming services have also raised prices.

Car tax will rise, depending on the vehicle’s emissions.

Water bills will change – on average falling £2 to £408 a year. However, some companies are bucking the trend. Thames Water, for example, is raising prices by £14 a year.

“The vast majority of price rises at the start of April are relatively small, so it’s easy to let them creep up unnoticed,” Ms Coles says.

“In many cases, there is very little we can do about it, but for things like energy prices, we can easily wipe out far more than the rise in the price cap by switching to a better deal.”

And what will change on 6 April?

A new tax year begins on 6 April, which means various thresholds will change, affecting your take-home pay. But this also means an increase – albeit small – in benefits to reflect the rising cost of living.

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Income tax thresholds have a final rise before being frozen. The amount earned each year before paying tax – known as the personal allowance – will rise from £12,500 to £12,570 and the higher rate threshold from £50,000 to £50,270.

The rise in the personal allowance means marriage allowance will rise very slightly from £1,250 to £1,260.

The full flat-rate state pension will rise 2.5% or £4.40 a week to £179.60 per week. Pension Credit is also increasing.

Benefits are rising by 0.5%. So child benefit is rising to £21.15 for the first child and £14 per week for subsequent children, an increase of 10p and 5p respectively.

The National Living Wage will rise 2.2% to £8.91 an hour and will be expanded to start at the age of 23 instead of 25. The National Minimum Wage, for younger workers, will also rise, with the increase depending on their age band.

The Lifetime Isa (individual savings account) charge for accessing money before the age of 60 – for any reason other than to buy your first home – reverts to 25%. It was cut to 20% early in the pandemic. From 6 April, if anyone accesses the money early, the penalty will include some of their own savings too.

Published at Wed, 31 Mar 2021 23:03:31 +0000

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Written by Riel Roussopoulos

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