MILLIONS of households will be affected by a number of major money changes in April.
The start of the new financial year on April 6 usually brings with it a swathe of changes that can impact your pennies and pounds.
We reveal some of the major money changes coming this month
This year is no different, with mobile phone and broadband providers hiking their prices for millions of customers.
The Spring Budget and last year’s Autumn Statement also saw overhauls announced to the childcare system and ISAs which come into effect this month.
Laura Suter, director of personal finance at AJ Bell, shared 10 of the biggest changes to watch out for.
ISA changes
There are four main changes coming to ISAs from April 6.
First, is that you will be able to pay into more than one of the same type of ISA each year, if it’s a cash or investment ISA.
Laura said: “It means that you can pay money into one cash ISA and then later in the tax year spy a better interest rate and open another cash ISA for more of your money.”
Those with either two types of ISA still won’t be able to breach the £20,000 allowance each tax year though.
The second big change is that people will be able to make partial transfers between different ISA accounts.
Currently, customers have to transfer all or nothing from one account to another.
The change means people can claim different interest rates from two ISA accounts at one time.
Third, is that those with an ISA won’t have to reapply for them if they already have one open.
Currently, an ISA is classed as “dormant” if no money has been paid into it for a whole tax year, but this will be scrapped.
Fourth, the age when someone can apply for a cash ISA is being upped from 16 to 18, bringing it in line with other types of ISA.
Lifetime Allowance abolished
The Lifetime Allowance, the total amount you can build up in all your pension savings without being taxed, is to be abolished from April 6.
Are you missing out on benefits?
YOU can use a benefits calculator to help check that you are not missing out on money you are entitled to
Charity Turn2Us’ benefits calculator works out what you could get.
Entitledto’s free calculator determines whether you qualify for various benefits, tax credit and Universal Credit.
MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto’s data.
You can use Policy in Practice’s calculator to determine which benefits you could receive and how much cash you’ll have left over each month after paying for housing costs.
Your exact entitlement will only be clear when you make a claim, but calculators can indicate what you might be eligible for.
It is currently set at £1,073,100, but will be replaced with two new main allowances – the lump sum allowance and lump sum and death benefit allowance.
The lump sum allowance, or tax-free lump sum limit people can take from their pension, will be set at £268,275.
The lump sum and death benefit allowance will be set at £1,073,100.
The lump sum and death benefit allowance will apply to payments that use up the lump sum allowance as well as the tax-free element of serious ill health lump sums and certain non-taxable lump sum death benefits.
Laura explained: “These allowances are designed to limit the pension tax-free lump sums people can receive during their lives and the tax-free lump sums they can pass onto beneficiaries when they die.
“Where previously pension withdrawals exceeding the lifetime allowance could be subject to a lifetime allowance tax charge, savers can now take as much income as they want from their retirement pot, with just income tax to pay on pension withdrawals.”
Child Benefit limits raised
The Government is upping the threshold from which parents have to start paying back Child Benefit from £50,000 to £60,000.
Meanwhile, the upper threshold from which parents have to pay back all of their Child Benefit is rising from £60,000 to £80,000.
It means for those where one partner is earning between £50,000 and £60,000, you will be able to receive more Child Benefit.
Meanwhile, those earning £60,000 to £80,000 will now receive some Child Benefit whereas currently they don’t.
Laura added: “The catch is that the benefit is based on both parents’ income – meaning if either of you earns more than the thresholds you’ll lose entitlement to the benefit.
“Families also need to claim the Child Benefit, they won’t automatically receive it.”
Free childcare hours extended
Working carers of two-year-olds will start getting 15 hours free childcare from April.
Eligible working parents must be in employment and earning less than £100,000 a year.
Currently, most parents only get free hours once their child turns three, but it has been extended to parents with younger children.
Any parents who qualify had to have applied by March 31 to start getting it this month though, otherwise you won’t be able to claim until September this year.
Laura said there were some catches to the extended childcare offer.
She said: “The first is that the hours are for term-time only, equating to 38 weeks a year.
“It means that parents who work the standard 52 weeks of the year will have a 14-week shortfall in the free hours.
“At the same time, nurseries and childminders often charge extra fees for additional hours, food, nappies or activity costs.
“This means that while the free hours save parents some money, they rarely provide a free ride for a kid in childcare for 15 hours a week.”
National Insurance cut
National Insurance (NI) will be cut for a second time for 27million workers after Jeremy Hunt’s announcement in the Spring Budget.
Millions of self-employed people will see their NI rate cut from 8% to 6% while millions more will see their rate cut from 10% to 8%.
It follows an already 2% cut which came into effect in January.
The latest change means someone on a £35,000 salary will save £450 a year while someone earning £50,000 will get a boost of £750.
National Minimum Wage increasing
Both the National Minimum and National Living wages will rise this month by up to £11.44.
From today, workers aged 21 and over will be entitled to the National Living Wage and see their pay go from £10.42 to £11.44.
Meanwhile, workers aged 18 to 20 will see their pay go from £7.49 to £8.60, under 18s from £5.28 to £6.40 and apprentices from £5.28 to £6.40.
However, Laura warned: “There are potential downsides to the increase though.
“While the Government sets the rate, it’s businesses around the country that actually pay it, and some may have to push up costs as a result.
“At the same time there are concerns that it could boost inflation again, as people have more money in their pocket to spend and businesses have to raise prices to afford the higher wage bill.”
State pension increase
The state pension will rise to £11,500 a year due to the triple lock.
The triple lock mechanism sees the state pension rise by whatever is highest out of average earnings growth, inflation or 2.5%.
With earnings growth coming in at 8.5%, it means those on a full new state pension will see their pay rise from £203.85 a week to £221.17 a week – worth over £900 more a year.
Those on a full old state pension will see their pay rise from £156.20 a week to £169.50 a week – a £691.60 increase across the year.
It’s worth bearing in mind, how much your income rises will depend on how much state pension you get.
You won’t receive a full state pension if you having NI years missing.
Millions on other state-funded benefits including Universal Credit and housing benefit will also see their pay rise, but by 6.7%.
Mobile, broadband and TV bills rising
Millions will see their mobile, broadband and TV bills rise this month, while others may have seen them increase at the end of March.
Telecom providers usually raise the prices of their contracts in spring, known as mid-contract rises.
The contracts typically rise in line with the RPI measure of inflation, plus a few percentage points more.
And because inflation has been high in recent months, it means millions are facing hefty increases.
BT, EE, iD Mobile, Plusnet, Three and Vodafone are all hiking their prices by 7.9% while others are increasing them by up to 8.8%.
Laura said: “While these might only equate to a few pounds here and there, if you add up all the changes across the year it can really rack up.
“You can beat the price hikes by switching provider, as often you’ll get a cheaper deal as a new customer.
“If you don’t want the hassle of moving you could call your existing provider and haggle down your monthly cost.”
It’s not just broadband and mobile phone contracts rising this month – the BBC TV Licence fee is going up to £169.50 a year as well.
But you can avoid paying for a TV licence if you’re on Pension Credit and over a certain age.
Council tax increases
Around 95% of English councils are increasing their council tax this month, according to the County Councils Network.
The actual price rise you’ll see depends on whether your local authority increases its rates by the maximum 4.99% or a different amount, and of course your council tax band.
Your band dictates how much you pay on your council tax and is between A-H.
However, a 4.99% increase for the average Band D property in the UK would see it rising from £2,065 a year currently to £2,168 – a £103 increase.
Some could see their’s rise even more depending on the size of their property and where they live.
But remember you might entitled to council tax support, depending on your circumstances.
For example, you can get a tax break if you are living alone or with children, or if you’re on certain benefits.
Energy bills falling
Energy regulator Ofgem’s price cap is falling by 12% from today, meaning the average household will see their yearly bills drop by £238 a year – or almost £20 a month.
The cap has fallen from £1,928 to £1,690 with the unit price for gas dropping to 6.04p from 7.42p.
Meanwhile, the price of electricity has fallen from 28.62p per kWh to 24.50p.
The standing charge, a fixed daily amount you have to pay for energy, no matter how much energy you use, is going up though.
Laura added: “While the cut means that a typical bill will fall to the lowest level in two years, energy bills are still way above where they were three years ago when the price cap stood at £1,138.”
What other changes are coming?
Household Support Fund extended
The Household Support Fund, which first launched in October 2021, has been extended once again.
The latest tranche will kick off from today and councils across England have until August to allocate their share.
What help you can get through the fund depends on where you live as each council receives a unique amount.
Who qualifies varies too, although it’s usually people on benefits or a low income that are eligible.
You should get in touch with your local council to find out what help is on offer.
You can find your nearest council by using the Government’s council locator tool on its website.
Debt relief order fee scrapped
A Debt Relief Order (DRO) is designed to help you deal with personal debt you cannot pay.
You have to apply for one through an approved debt adviser, and typically have to fork out £90 for an administration fee.
But the £90 fee is set to be scrapped from April 6 which will help people already in a tricky financial situation.
Through a DRO, you don’t have to repay debts for an agreed period of time, usually a year, and creditors can’t take action against you.
This only includes debt piles of up to £30,000.
You can get free help with debts from charities such as Citizens Advice, StepChange and National Debtline.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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