Published On: Mon, Mar 11th, 2024

Why your bills could increase £785 within weeks despite energy price drop | Personal Finance | Finance

Families have been warned their bills could increase more than they realise from next month with the potential for an extra £785 on top of current costs.

Household bills including water bills, broadband and mobile bills and council tax are all set to go up, but there are other tax increases and price rises that will add to people’s expenditures.

Sarah Coles, head of personal finance at wealth firm Hargreaves Lansdown, said: “April has worked hard to earn its reputation for being awful – ushering in a range of price rises to squeeze us even harder with each passing year.

“So it comes as a welcome change that we have good news to celebrate this year – with energy bills falling £200. Unfortunately, our costs are still set to rise.”

The group gave a run down of some of the costs that will be going up from April and what it mean for your finances.

Council tax – £103

Many councils in England are raising their council tax by the maximum five percent increasing bills for the average band D home from £2,065 to £2,168, an increase of £103.

People in areas with struggling councils could see bills go up by even more, with cash-strapped Birmingham increasing the levy by 10 percent this year and next year.

Water bills –  £27

Water bills will be going up in England and Wales on average six percent, increasing bills by £27. Bills in Scotland are shooting up eight percent, up £36.

Ms Coles said: “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.”

Broadband and mobile bills – £53

Broadband and mobile providers are set to implement their mid-contract hikes, with many tariffs rising in line with inflation plus an additional amount.

This means price hikes of up to 8.8 percent. For a person who currently pays £25 a month for broadband and £30 for mobile, an eight percent hike would add £4.40 a month to their bills, or £52.80 a year.

Car tax – £15

The standard car tax charge is to go up in line with the RPI measure for inflation for January, at 10.1 percent. This will increase the bill from £165 to £180.

TV licence –  £10.50

The standard TV licence for a colour TV is going up from £159 to £169.50.

However, older Britons may be able to avoid this bill. Ms Coles explained: “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.”

Air passenger duty – £8 for a family of four with a return flight in Band B

Duty charges for the domestic band will rise from £6.50 to £7 for economy and from £13 to £14 for business. Rates for Band A (up to 2,000 miles) will remain the same.

The levy for Band B (2,000 to 5,500 miles) will rise from £87 to £88 for economy and from £191 to £194 for business, while Band C (over 5,500 miles) will rise from £91 to £92 and from £200 to £202 for business.

Tax on investments – £169-600

The dividend tax allowance is dropping in April from £1,000 to £500. This will affect anyone earning dividends on investments held outside tax wrappers as soon as they use up the allowance.

The tax increase will also hit those who have their own company and pays themselves in dividends. The capital gains tax allowance is also being reduced from £6,000 to £3,000.

This means in the new tax year, a person who makes a capital gain of £6,000 on shares they hold would pay an extra £600 in tax.

Meanwhile, a person who earns just over the higher rate tax threshold and makes £1,000 from dividends would pay 33.75 percent on £500 of this, adding £169 to their tax bill.

Ms Coles said: “Investors can protect themselves from both by selling assets and making gains within their capital gains tax allowance this year (£6,000), and then using the Bed and ISA process to move up to £20,000 into an ISA.

“After the end of the tax year on April 6, they can do the same again, although they’ll need to stay within the lower capital gains tax allowance.

“Married couples can share assets and both use their allowances, so by the April 6, between them, they could have protected another £80,000 in ISAs.”

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