All the financial changes should hit your pocket in April

APRIL is about to make a series 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 a few – and while there are plenty of price hikes underway, there are also good news.

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Spring marks the start of the new fiscal year in AprilCredit: PA

April is the start of the new fiscal year, which is mid-year rather than the traditional calendar year.

This is often the time of year when changes are made to the rules affecting your money (but not necessarily the only time).

From tax increases to bill increases, here’s what you need to know about all the changes coming next month and how to prepare for them.

Increase in the energy bill

The energy price cap will rise from £1,277 to £1,971 on April 1, an increase of nearly £700.

But that number is the typical dual fuel bill and the exact amount you pay will depend on your actual usage.

There’s not much you can do right now to lower your bill, because switching providers won’t get you the best deal anymore.

Previously, fixed offers offered cheaper prices, but more due to the surge in wholesale prices.

In fact, some companies are accused of touting fraudulent offers that are double the ceiling price.

However, you can still make some changes to reduce your energy consumption and your bill, such as lowering the thermostat or using the eco wash settings.

There are also programs, support and other help available if you are worried about your bill.

Some providers are offering their customers deals that might be cheaper and Martin Lewis advised keeping an eye out for those deals.

Increase in National Insurance

You will pay more tax from April as the government introduces its social care tax.

This means an extra 1.25 percentage points on top of existing national insurance rates to help cover the cost of social care.

Rates will drop from 12% on earnings between £184 and £967 per week, to 13.5%.

On winnings above this amount, the rate will increase from 2% to 3.25%.

In practice this means that on earnings of £10,000 you will pay £5 more a year and on earnings of £25,000 you will pay £193 more.

The amount of National Insurance you pay depends on how much you earn from work, so unfortunately there’s not much you can do to change it.

But, it’s worth checking out other ways to save on tax to counter the rise.

For example, Marriage Allowance is worth £250 for married couples and civil partners, where one person earns less than Personal Allowance.

If you are married or in a PACS, you can transfer your unused personal allowance to the highest income.

But the highest earner still has to 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 are eligible, you can apply online as long as you have both your national insurance number and ID.

Here are all the ways you can claim tax refunds that could be worth thousands of dollars – including if you had to work from home because of the pandemic.

Dividend tax hike

More than half a million self-employed people who pay themselves via dividends are also expected to pay more.

To maintain fairness between employees and those who work for themselves, the government has also increased the tax on dividends by 1.25 percentage points.

It applies to approximately 700,000 self-employed persons and entrepreneurs who are remunerated as directors of a public limited company.

Directors of limited liability companies usually pay themselves a small salary up to the national insurance threshold and then take dividends from the company’s profits.

They benefit because the tax on dividends is lower than the income tax they would pay on higher wages.

Many freelancers, small business owners, and entrepreneurs pay themselves through dividends.

This increase will raise the dividend tax rate for those in the basic rate tax bracket from 7.5% to 8.75%.

For those in the top-rate tax bracket, the dividend tax rate will increase from 32.5% to 33.75%.

Meanwhile, the tax on the highest earners will drop from 38.1% to 39.35%.

This 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, this cannot be avoided, but it can be beneficial to check that you are claiming any taxes that may be due to you.

Increase in the living wage

One change that could help cushion the blow of rising taxes is a pay raise if you’re on minimum wage.

It’s worth checking your payslip to see if the salary increase is added from April.

Companies are named and humiliated if they do not pay the basic amount required by law.

There are two types of legal minimum:

The national minimum wage is paid to workers under 23 but of school leaving age, and there are different rates depending on age.

People aged 21 to 22 are currently paid £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 set to rise to £4.81.

Likewise, apprentices will see the minimum rate rise from £4.30 to £4.81.

If you’re over 23, you could be eligible for the National Living Wage, which will drop from £8.91 to £9.50.

This represents an annual increase of £1,000 for an employee working 35 hours a week when the new rate takes effect.

There is also the minimum living wage, which is a voluntary minimum that some employers agree to pay and which is usually higher than the official government rate.

Those earning the real living wage currently earn £9.90 an hour or £11.05 in London.

The same worker in London on the Real Living Wage would earn nearly £3,000 more than someone on the National Living Wage over a year.

State pension and benefits increase

Anyone receiving the state pension will also see their salary increase 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 rising rates here.

Although this is better than no salary increase at all, unfortunately with inflation rising at a higher rate and expected to reach up to 8%, it could make the overall situation worse.

According to AJ Bell, due to inflation, increasing the New State Pension from £179.60 to £185.15 will actually look like a reduction to £173.04.

This means that it is more important than ever to check that you are receiving all the benefits to which you are entitled.

You can check using an online benefits calculator, offered by charities such as Turn2Us and EntitledTo.

Eat and drink

Your favorite eating places could start charging more from April when pandemic business relief ends.

The VAT rate for hospitality businesses, such as pubs, bars, cafes and restaurants is returning to 20% after being temporarily lowered to 12.5% ​​during the pandemic to help businesses get through the lockdown.

But the VAT jump could force some businesses to raise prices, which would further increase the cost of a meal, evening or weekend.

Unfortunately, this comes at a time when costs are already high and rising – several chains and stores have already warned of price increases this year.

It’s never been more important to stay on top of your budget and hunt for deals.

Here are seven apps you can use to spot discounts at stores like B&M, Asda and Amazon, plus six secrets to packing ‘yellow sticker’ food at supermarkets including Tesco, Asda and Aldi.

Income tax freeze

National Insurance rates may increase, but income tax will NOT.

Rates are frozen for this year – and until 2026.

This means you will pay no income tax up to £12,570 and tax at the basic rate of 20% on any income above this amount and up to £50,270, after which it is tax at the 40% higher rate.

But the freeze means that many workers will actually pay more tax due to higher wages.

The Center for Economics and Business Research (CEBR) has warned that more than nine million workers will pay more due to the tax freeze.

Five million lowest-paid workers could face income tax for the first time as a result of these measures, and another four million workers will be pushed into the top tax bracket.

AJ Bell says that normally these thresholds should increase overall with inflation, to provide some protection for taxpayers.

It’s worth checking your tax code to make sure you’re paying the right amount of income tax.

A Martin Lewis fan got a £465 tax refund with just one call asking for his tax code.

Capital gains tax freeze

Capital gains tax is what you pay when you make a profit on assets such as buy-to-let property, art, or investments not held in an Isa.

There’s a £12,300-a-year stipend before kick-off – and that too is frozen until 2026.

Additionally, any gains you make from saving and investing in an Isa are tax exempt.

According to AJ Bell, homeowners and owners of second homes are most likely to be affected.

Those who are married or in PACS can reduce their CGT obligation by transferring assets to their spouse.

This allows you to use two batches of the £12,300 capital gains tax allowance if you have a large gain to crystallize.

It could potentially save you £2,460 in capital gains tax, if you’re a higher rate taxpayer selling shares, the finance company says.

Elsewhere, we’ve rounded up the full list of benefits up in April, including Universal Credit and Child Benefit.

New laws will also 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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