Household budgets are likely to be further stretched in the first week of April, as dozens of items including water bills, council tax, NHS charges, and some broadband and energy charges all rise.
Those on welfare will feel the squeeze especially, as payment rates are frozen for the second year in succession, and the generosity of some benefits are reduced. However, those in work are likely to become better off, as tax rates become more generous, and the National Living Wage also rises. Some of these changes will occur on 1 April, at the start of the government’s financial year, while others occur on 6 April, the start of the tax year.
From 6 April the personal allowance – the annual amount you can earn before paying tax – rises from £11,000 to £11,500. This should save over 20 million people £100 a year, and take thousands out of tax altogether. At the same time the starting point for paying the higher, or 40%, rate of tax will move from £43,000 to £45,000. This will save higher rate taxpayers a further £400 a year. However, in Scotland the higher rate threshold has been frozen at £43,000, so better-off taxpayers north of the border will see no benefit.
Millions of people over the age of 25 will receive a 4% pay rise from 1 April, as the National Living Wage (NLW) increases from £7.20 an hour to £7.50. However, those between the ages of 21 and 24, who receive the National Minimum Wage (NMW), will get a rise of only 1.4% – well below the current 2.3% CPI inflation rate.
The new wage rates are:
Savers can apply to open a new Lifetime Isa (Lisa) from 6 April. The government will add a 25% bonus to your savings after a year, up to a maximum of £1,000. The Lisa is designed for people who want to buy a property, or need a retirement income. Anyone nearing the age of 40 is advised to consider opening a Lisa soon, as those over that age cannot start an account.