Helping you make the most out of your money
Helping you make the most out of your money
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The new tax year is set to bring with it a host of financial changes, from higher taxes to rises in household bills after a year of spiralling inflation – and almost every household will be affected.
Freezes in personal allowances and income tax thresholds along with cuts in capital gains tax allowances will affect millions of people. At the same time, telecoms companies will be enforcing inflation-linked rises of more than 17%.
Here are the main changes that you need to know about.
Read more: State pension increase 2023
From income tax band freezes to capital gains tax allowance cuts, here are 23 changes to be aware of from April:
Millions of phone and broadband customers are in line for price increases from April that will add more than £50 to the typical annual bill. Broadband and TV provider Sky, for example, has announced an average price rise of 8.1% for its customers, amounting to about £67 extra a year on average. But the exact price increase you see will depend on which Sky services you use.
Other big telecoms firms – such as O2, BT, EE, Plusnet, TalkTalk and Vodafone – tend to raise prices every April in line with either the retail price index (RPI) or consumer prices index (CPI) measure of inflation, plus an additional 3.9% or 3.7%.
The RPI reading used is for the January of that year – it was 13.4% in the year to this January – and the CPI figure is for the previous December, when it stood at 10.5%.
Customers of O2 and Virgin Mobile, whose prices are tied to the RPI, will see a 17.3% rise in mobile bills. Households supplied by BT, Vodafone , EE and Plusnet, whose prices rise in line with the CPI, face a 14.4% increase. At TalkTalk, the price rise is 14.2%.
While inflation-linked price hikes are allowed, you do have rights. Find out how to save money on broadband bills.
Broadband and mobile phone bill rises will come into effect from 31 March.
Read more: Can I cancel my phone contract for free?
On 1 April, council tax is set to rise by the maximum amount allowed. This is 5% in areas where the council has responsibilities for adult social care – and 3% where they don’t. The changes were announced in last year’s mini-budget.
Government figures estimate average bills will rise to over £2,000 a year following tax year changes. That’s an increase of £100 more a year for those living in Band D – a record 5.1% rise.
Houses and flats are ‘banded’ from Band A to Band H depending on how valuable they are.
Every council charges different rates for each band. You’ll need to check with your local authority on changes, if you haven’t received notification in writing yet. If you’re still waiting for that letter, you can check online.
Council tax rises will come into effect from 1 April.
The Energy Bills Support Scheme – the universal discount on bills over winter – comes to an end on 31 March. It amounts to households losing out on around £67 a month from the start of the new tax year.
Meanwhile, the energy price guarantee – a temporary measure to protect consumers from increases in wholesale gas prices – has been frozen at £2,500 for an additional three months from April to June. The government claims this extension will save a typical household £160.
Around 8 million households are, however, entitled to £900 worth of cost-of-living payments to put towards energy bills. These will be means-tested benefits for those on universal credit, Income-based Jobseekers Allowance, Income-related Employment and Support Allowance, Income Support, working tax credit, child tax credit or pension credit.
The first of the three payments will be made in April for £301. Then there will be another in the autumn and the final one in spring 2024.
Read more: How to save money on your energy bill
Changes to energy bill support will come into effect from 1 April.
Water bills are set for their biggest hike in almost 20 years on 1 April.
According to industry body Water UK, an average household in England and Wales will see annual bills rise by £448. The 7.5% increase means customers will pay on average £31 more than last year.
The increase you see will depend on where you live and your water supplier. Increases will also impact households with water meters. That’s because they still pay the fixed charge which covers admin and sewerage services.
Water bill changes will come into effect from 1 April.
The budget included increases to car tax – also known as Vehicle Excise Duty (VED). This hike is based on the Retail Price Index (RPI) of 10.1%. This will take effect from the start of the new tax year.
The exact amount your VED will go up by, however, depends on your vehicle and when it was registered. To work out your increase, take your existing car tax bill, multiply that by 10.1 and then divide by 100. You then add that figure to what you currently pay and you’ve got the new amount.
Electric vehicles are exempt until 2025.
Car tax changes will come into effect on 1 April.
Read more: Will an electric car save me money?
In November, the Treasury confirmed the state pension would increase in line with September’s CPI inflation rate of 10.1%. The full new state pension will rise to £203.85 a week or £10,600.20 over the year from 6 April.
Based on the increase, anyone who reached state pension age before April 2016 will get about £156 a week or £8,100 for the year – although of course, this depends on how much state pension you receive.
Meanwhile pension credit will rise by 10.1% from April, meaning claimants will get £201.04 up from £182.60 – a £18.44 difference. Couples will get £306.85 a week rather than £278.70.
State pension changes will come into effect from April 10.
The national living wage – the rate for over 25s – will increase from the start of the new tax year. The rate for everyone else – known as the minimum wage – will also rise.
For 23-year-olds, their hourly rate will rise from £9.50 to £10.42. For 21–22-year-olds it will be boosted from £9.18 to £10.18 an hour and for 18-20-year-olds, from £6.83 to £7.49 an hour.
Read more: Minimum wage rise 2023: How much is it going up?
National living wage and minimum wage changes will come in effect from 1 April.
The amount an eligible employee or worker can claim for statutory sick pay is rising on 6 April from £99.35 a week to £109.40. It can be paid for up to 28 weeks.
The eligibility criteria are that the worker must have been off sick for at least four “qualifying days” in a row – on days when they are usually required to work – earn on average at least £123 a week before tax, and have told their employer they’re sick within any deadline the employer has set or within seven days.
Statutory sick pay changes will come into effect from 1 April.
Statutory maternity pay, paternity pay, adoption pay, shared parental pay, parental bereavement pay and maternity allowance will all rise on 2 April. As a result, the weekly payment will increase from £156.66 to £172.48.
Maternity pay changes will come into effect from 2 April.
If you receive universal credit or personal independence payments your support will rise in by 10.1% in April.
As an example, a single person, under 25 will see universal credit payments rise from £262.31 to £292.11. You don’t need to do anything as your payments will automatically increase at the start of the new tax year.
These changes will come into effect from 6 April.
Child benefit payments are rising in line with the same CPI inflation rate of 10.1% on 10 April.
The new rates will be £24 a week for the eldest child and £15.90 a week for second and additional children. Parents don’t have to do anything to get the new increased rate, it will be paid automatically.
Child benefit changes will come into effect from 10 April.
The thresholds for when basic and higher-rate taxes are applied were frozen in the autumn statement by chancellor Jeremy Hunt.
The 20% basic rate applies on earnings of between £12,571 and £50,270, and the higher rate of 40% kicks in at £50,271.
The policy of not increasing allowances in line with the cost of living, (or fiscal drag, as it is known) will force millions of people to pay more tax as their earnings rise and take them into a higher tax band.
Find out how to make sure you’re on the right tax code.
Income tax changes will come into effect from 1 April.
The chancellor announced higher taxes for those earning six figures by reducing the threshold at which the 45% additional rate kicks in to £125,140 from the current £150,000 from 6 April.
The move means that someone earning £150,000 a year will pay almost £1,250 a year extra in tax – putting an extra 2% on their total tax bill.
Read more: ‘Should I buy National Insurance contributions to top-up my state pension?’
Income tax changes will come into effect from 1 April.
Workers pay 12% in national insurance (NI) contributions when their salary goes over the personal allowance of £12,570. The freezing of the threshold from 6 April, 2023 to 5 April, 2028 will mean an effective rise in NICs for both employees and employers over time when pay levels increase. The more you earn, the more you will pay in NI.
So if you are earning £35,000, you pay 12% of the difference between that figure and £12,570 – £22,430 – to end up with an NI bill of £2,691.60. If you then get a pay rise to £40,000 in the following year, you will be due to pay 12% NI on £27,430 of salary and so have a bill of £3,291.60.
The personal allowance is the amount you can earn or receive each year before you start paying income tax. This allowance of £12,570 is frozen and the chancellor extended the freeze until 2028.
Taxes due when selling an asset will rise from April. That’s because while today you can receive up to £12,300 profit from the sale of an asset without paying any tax, from 6 April the capital gains allowance will fall to £6,000 – and to £3,000 from April 2024.
These changes will come into effect from 6 April.
Individuals who receive an income from dividends will pay more tax – or start paying tax where they haven’t before – from April.
In the tax year 2022/23 you can receive up to £2,000 in dividends, tax-free. From 6 April the tax-free allowance is dropping to £1,000 and then £500 in April 2024.
Basic, higher and additional-rate taxpayers pay 8.75%, 33.75% and 39.35% tax respectively on amounts higher than the tax-free limit.
These changes will come into effect from April 6.
The annual ISA allowance for tax-free saving and investment remains frozen at £20,000. The allowance, which you can put into cash or stocks and shares (or both), has been at this level since 2017.
If the £20,000 tax-free allowance had risen each year in line with CPI inflation since 2017, the annual allowance would now be roughly £26,000.
There is a cap on how much you can save into private pension pots in any one tax year and still get tax relief on your contributions from the government. This is known as the pensions annual allowance.
From 6 April, this allowance will rise from £40,000 to £60,000. The change therefore means you can save more into a pension without having to worry about any tax bills for going over the limit.
You will only be able to put that maximum amount into your pension each year, however, if it doesn’t exceed your annual earnings.
These changes will come into effect from 6 April.
The lifetime allowance (LTA) tax charge will fall to 0% from 6 April, ahead of it being legally abolished altogether in 2024. The limit on what you can contribute to your private and workplace pensions over your lifetime has been set at £1,073,100, with a 55% tax charge applying on any retirement savings above that amount.
The removal of the lifetime allowance means that you can save into your pension without the concern of a tax charge should you breach any limit.
These changes will come into effect from 6 April.
Once annual earnings exceed £240,000, the amount you can pay into your pension and enjoy tax relief falls to a minimum of £4,000 a year. From 6 April, the minimum tapered allowance will rise to £10,000. The earnings threshold will rise to £260,000.
These changes will come into effect from 6 April.
The money purchase annual allowance (MPAA) is rising from £4,000 to £10,000 on 6 April. It applies to anyone who has already withdrawn money from their pension savings.
Once you do so, your annual allowance is reduced. The rise will allow those who have needed to access their pensions to continue to build their pot and enjoy tax relief.
These changes will come into effect from 6 April.
A benefit-in-kind tax applies to any perk or incentive other than your basic salary that is taxable.
Rates are increasing on 6 April, which means you will pay a little more for your company car. The exact rises will depend on what you drive and its value. You can ask your human resources department for information.
Benefit changes will come into effect from April 6.
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