UK households are set to see their annual bills rise this April – here’s a breakdown of the costs you might see creep up. Plus, our Head of Personal Finance, Brian Byrnes, shares ways to balance your financial goals with your cost of living.
What costs are increasing in April?
- Council tax. In England, council tax will increase up to 4.99% and the government has approved bills to rise beyond that. In Scotland, rates could go up by 10% as a freeze on increases comes to an end. In some areas of Wales you can expect to see rates jump up by 15%. All of Northern Ireland’s councils will see an increase in council tax rates, by up to 5.99%.
- Water. The cost of water in the UK is increasing by £10 on average. However, it varies from supplier to supplier. For example, SES Water will see a decrease of £5 per year, whereas Southern Water will see an increase of £225 per year.
- Energy. Ofgem, the energy regulator, has set the price cap at £1,849 – a 6.4% increase vs the last tax year.
- Road tax. Vehicles registered after April 2017 will be subject to a £5 increase in road tax, costing £195 in total for standard-rate road tax. Also, electric vehicles will no longer be tax exempt.
- Broadband and mobile. Most broadband and mobile networks will raise their prices in April. For example, those with Virgin media can expect up to 7.5% increase in their bills and those with an EE sim-only contract could be subject to an increase of up to 6.4%.
- TV license. The cost of an annual television licence is expected to go up by £5, bringing the total to £174.50
6 ways to save when costs increase
While no one welcomes increases to the cost of living, these incoming changes don’t have to put an end to your financial goals – it just means reassessing your game plan. Here’s Brian’s top tips for managing the changes alongside your existing financial goals.
1. Budget
Many of the price hikes vary depending on where you live and who your suppliers are. A great place to start is to work out exactly how much your bills are expected to go up by and make a budget of your monthly expenses. This way, you know exactly how much money you have to play with when it comes to your short and long term goals.
Another practical budgeting tip is a line-by-line review of your outgoings. Are there subscriptions that you meant to cancel? Online orders you meant to return? For bills like your phone or energy, have you negotiated the best rate available? You don’t need to do this every month but it’s worthwhile a couple of times a year and April is a great time to make a start.
2. Reassess your savings plan
Looking at your new monthly budget, is your current savings plan still feasible? It’s important you can afford to save and invest without having to take on any debt to afford living expenses. Make adjustments where needed on regular savings.
If you’re working towards multiple goals at once and your cost of living has increased, you could consider reprioritising the most important goals. For example, focusing on one at a time, or putting most of your savings towards one and lower contributions towards another, less pressing goal.
3. Go back to basics
If you can’t afford to make the same contributions you have been, it doesn’t mean you have to stop contributing altogether.
Features like the Moneybox Round ups feature makes it easy to save and invest as you spend, by rounding up your everyday purchases to the nearest pound. It’s surprising how much these smaller contributions add up to something much greater!
To set up Round ups just head to the Moneybox app to Settings > Round ups.
4. Take advantage of what’s available
There is a range of accounts available to you at Moneybox that are designed to make it easier for you to build wealth with confidence.
Putting your money into a high-interest tax-wrapped account, like the Moneybox Cash ISA or Moneybox Open Access Cash ISA, allows you to build your savings while earning tax-free interest. Or, if you’re saving towards your first home, the Moneybox Lifetime ISA rewards you with a 25% government bonus of up to £1,000 each tax year, while also being a tax-free account. Plus, the bonus is paid monthly so you can really see your money grow from the get go.
Cash ISA: Interest is accrued daily and paid into your account yearly on the date you opened your Cash ISA. The rate is variable and we’ll inform you if it changes. Isa and tax rules apply. Other accounts available.
Lifetime ISA: A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA. For Stocks & Shares LISA, capital is at risk. Isa and tax rules apply. Other accounts available.
5. Invest for long-term goals
When it comes to long-term goals – which we consider to be five years away minimum – investing can be a useful way to make your money work harder. If you’re saving for something in the near future, you should consider putting your money in a cash savings account.
Investing over the long term with accounts like the Moneybox Stocks & Shares ISA means you could benefit from compound interest – which is when you earn interest on the gains from your original investment. So your money can grow without lifting a finger! Plus, you’ll earn tax-free gains on contributions up to £20,000 every tax year.
With the Moneybox Stocks & Shares ISA, you can choose from three simple Starting Options, or customise your portfolio with top US stocksStocks, also known as shares or equities, represent units of ownership in a company., fundsFunds, also called ‘tracker funds’, are financial instruments that have been set up to match or ‘track’ the price of a market index. Investing in a fund lets you get exposure to different financial assets like shares and bonds, without having to buy them directly., and ETFs.
Capital at risk. Investing should be long term, and consider an emergency savings buffer. FeesThe costs you pay to invest your money. apply. ISA & tax rules apply. Other accounts available.
Explore Moneybox Stocks & Shares ISA
6. Don’t stop your pension contributions
It could be tempting to pause your pension contributions until you have more disposable income – but here’s why that could be a big mistake.
Aside from a loss of contributions to your pension, you could also miss out on a host of benefits working in your favour to build a healthy pension pot.
- Tax relief. With a Moneybox Pension, you’ll automatically get a 25% top up to your pension contributions. If you’re a higher or top rate taxpayer, you could be eligible for a higher rate of pension tax relief (although you’ll have to claim this back yourself). If you were to stop paying into your pension you’d be missing out on free money from the government.
- Employer contributions. If you’re enrolled into a workplace pension scheme, your employer will typically contribute 3% of your annual salary in addition to your contributions. Plus, you won’t pay tax on their contributions.
- Compound interestThe return you earn on top of your investment gains by reinvesting your profits instead of withdrawing them.. The money you contribute to your pension is invested into the stock marketThe global network of stock exchanges that lets investors buy and sell shares in publicly listed companies.. When you invest in the stock market you benefit from compound interest, which is when you earn interest on the returns of your original investment.
So if pausing your pension contributions now in order to gain a small amount of additional income today, remember it could mean a greater loss when it comes to retirement.
If you do feel like you really need to gain extra income, lowering your pension contributions could be a good alternative to stopping them altogether.
As with all investing, the value of your pension can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and is subject to change. Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to age 57 from 2028).
Tune in: Moneybox Masterclass
Don’t miss our Head of Personal Finance, Brian Byrnes, and Georgie Frost (Host of This is Money podcast, Editor-at-large at Times Money Mentor) share their expertise on making the most of your money in the new tax year and maximising your tax-free ISA allowance.