From next month, millions of households are set to face a £400 annual increase in their bills. The rise will affect various sectors including energy, water, council tax, broadband and mobile prices, all of which are expected to go up at the same time.
Other costs such as road tax, TV subscriptions and stamp prices are also predicted to rise, while retail price inflation could escalate if retailers decide to pass on their increased costs to consumers. However, some relief may be provided by an increase in the minimum wage and benefit payments.
April increases in energy, water, and council tax alone will add an extra £342 to the average household's expenses, pushing the combined cost for these three services to over £4,700 annually. If the same household also has broadband, two mobile phone contracts and a TV licence, they will need to budget an additional £400 per year.
However, debt experts have warned about the existing financial strain many households are already experiencing. Charity StepChange reported that nearly three in 10 people seeking their help spend more on bills each month than they earn.
The average monthly deficit is a concerning £532, a figure 15% higher than it was two years ago. This comes despite a decrease in inflation and supposed easing of the cost of living crisis, reports the Mirror.
'April's bill increases will only make things tougher'
Richard Lane, chief client officer at StepChange, said: "While headlines suggest the cost-of-living crisis is easing, for many households, the financial pressures that pushed them into difficulty haven't gone away. April's bill increases will only make things tougher. Council tax is set to rise by 5% for most – and even more in some parts of the country.
"Many people will also face increases in their other essentials as the energy price cap rises and water companies increase bills. With housing costs still painfully high, these increases will stretch already strained budgets even further."
Lane continued: "At StepChange, we see the impact of this every day. The hardest-hit households are seeing their monthly budget deficits grow. More than a quarter of our clients say the cost-of-living crisis is the reason they've fallen into debt."
Grace Brownfield from the Money Advice Trust, the organisation behind National Debtline, said: "There is little let-up in sight for many struggling households. We are already seeing the effect that high prices have had. Energy arrears are now the second most common debt we're helping people with at National Debtline, behind only credit cards, and a third of people we help have council tax debt."
April price hikes will make the impact of already high essential bills even greater. Officially, inflation has edged back up to 3%, but many feel a much steeper rise in prices. A survey by the Bank of England revealed that the average person estimated inflation to be closer to 5%, although they anticipated it would decrease over the next year.
There is little hope for borrowers to find relief next week, as the Bank of England is predicted to maintain its base rate at 4.75%. Mortgage borrowers nearing the end of their affordable deals are hoping for a reduction to ease the impact.
In the Bank of England's survey, 31% of participants stated a drop in rates would be beneficial for them, while 26% argued they should actually increase. Renters continue to bear the brunt of significant hikes, with average private rents having risen by 8.7% in the year leading up to January.
Despite the escalating cost of living, millions of households can expect an income boost from April. The National Living Wage for workers aged 21 and over will see a 6.7% increase to £12.21 per hour.
Benefits and tax credits linked to inflation will rise by 1.7%, and the state pension will see a 4.1% increase due to the triple lock. However, a freeze on income tax thresholds will result in more individuals being "dragged" into the tax bracket or paying at a higher rate.
Here are some of the price rises expected in April:
Energy bills – up £111
From April 1, the energy regulator Ofgem's price cap will rise by 6.4% – a higher increase than anticipated – pushing the average annual bill up by £111 to £1,849. This change will impact around 22 million customers, including four million on prepayment meters.
The exact amount you'll pay depends on your gas and electricity usage, as the price cap doesn't limit the total household bill but sets a maximum charge for unit rates of gas and electricity, along with standing charges. Although the average annual increase is £111, the cap is reviewed every three months, so this figure may fluctuate.
What are your options?
There are numerous fixed-rate deals available that are less expensive than the price cap, with some offering savings of up to £179 per year compared to the April cap. It's important to note that it's the unit rates of energy that are fixed, not the overall bill.
Also, bear in mind that Ofgem's cap could potentially decrease later this year. Wholesale gas prices have recently fallen and could drop further if a peace deal is reached in Russia's war on Ukraine.
Water bills – up £123 a year
Unlike energy, households don't have a choice over their water service provider, which makes the surge in bills next month particularly frustrating. Average bills are set to skyrocket by up to 47%, prompting urgent calls for assistance for customers already under financial strain.
Some suppliers are planning to increase prices by as much as £224 annually, marking the largest wave of hikes since privatisation 36 years ago. The average household water and sewerage bill in England and Wales is expected to rise by 26%, or £123 per year, reaching £603. Suppliers justify these significant increases as necessary for carrying out long-overdue investment work to address leaks and sewage discharges.
So, what can you do?
A scheme known as WaterSure aims to assist certain individuals with their bills. To qualify, you must be receiving benefits and need to use a substantial amount of water, either due to medical requirements or because your household includes a specific number of school-age children. You also need to have a water meter installed or be awaiting its installation.
Council tax – set to increase by approximately £108
Most local authorities in England responsible for delivering social care are anticipated to raise council tax by the maximum 4.99% starting next month. Recent analysis by the PA news agency of 139 councils that have proposed or confirmed increases showed that 85% plan to enforce the upper limit.
Six councils facing severe financial stress will be permitted to raise the tax by more than 5%, including Bradford which can increase it by 10%. Some cities with mayors can also add a separate levy that covers funding other services.
Last April, the average council tax in England saw an increase of £106, bringing it to £2,171 annually. The government has not yet released the average for this year. However, as a rough estimate, a 4.99% increase would push the average Band D property up by another £108 to £2,279.
What can you do?
If your income is low or you're receiving certain benefits, you may be eligible for assistance from your local council with your council tax bill – this is referred to as Council Tax Reduction or Council Tax Support.
TV licence – up £5 a year
From April 1, the cost of a colour licence will rise from £169.50 to £174.50 per annum. A black and white TV licence – for those who still have one – will also see an increase from £57 to £58.50 annually. A TV licence is required to watch live TV or any shows on BBC iPlayer. If caught watching live TV without a licence, you could face a fine of up to £1,000.
Blind or severely sight-impaired individuals can apply for a 50% concession, reducing the cost of a colour licence to £87.25. Other concessions and arrangements are available, including for people residing in certain types of residential care and for over 75s receiving Pension Credit.
What can you do?
The Simple Payment Plan is designed for those experiencing financial difficulties. Eligible customers can opt for either a fortnightly or monthly payment plan to spread the cost of a licence over 12 months.
Broadband and mobile prices – up an average £54 a year
From March 31, countless individuals tethered to mobile and home broadband contracts will experience price hikes. Previously, contract tariffs were tied to inflation, leading to significant increases in past years.
Nowadays, those entering new contracts should be clearly informed in "pounds and pence" about the annual cost escalation. However, customers on older agreements might still face rises exceeding inflation rates.
BT has indicated that clients who entered into contracts prior to April 10 last year can expect their prices to jump by 6.4% starting March 31. According to price comparison site Uswitch, broadband prices are set to surge by an average of £21.99 per annum for those on inflation-based contracts, with mobile users seeing an annual increment of £15.90.
This could lead to an additional cost of nearly £54 per annum for a typical household with broadband and two mobile plans. And if TV subscriptions are part of the equation, expenses will climb even higher, as both Sky and Virgin Media are poised to raise their rates.
What can you do?
Uswitch reports that over nine million UK residents are currently not contracted for their broadband, while a staggering 33 million are out-of-contract with their mobile service. They estimate that switching to a newer broadband deal could result in an annual saving of £181 for a household.
Meanwhile, mobile users can send a text message containing 'INFO' to 85075 to discover whether they're still bound by a contract and learn about any potential fees for early termination.
Car tax
Car tax, which can vary significantly depending on the vehicle, is also in line for an increase from April 1, with some drivers bracing for sizeable leaps in cost. Electric car owners are set to face significant changes as vehicle excise duty is introduced for their vehicles. Previously exempt, electric cars registered from April will now incur a £10 charge in the first year, escalating to £195 annually for the subsequent five years.
Vehicles registered between April 2017 and the present day will also be subject to the £195 fee. However, those registered before this period, but after March 2001, will benefit from a much lower tax of just £20 per year. The situation becomes more complex with new electric vehicles priced at £40,000 or above, which will attract a "luxury car tax" of £425 per annum from the second to the sixth year of ownership.
Petrol and diesel car owners aren't spared either, with increased charges across the board. Cars are categorised into bands based on CO2 emissions and the year of manufacture. For instance, vehicles emitting 1g to 50g of CO2 per kilometre will see their first-year rate jump from £10 to £110. At the higher end, new cars producing over 255g/km of CO2 will see the first-year rate soar from £2,475 to an eye-watering £5,490.
From the second year onwards, and for cars registered post-April 2017, the standard rate will increase by £5 to £195. There will also be hikes for vehicles registered before 2017.
What can you do?
If you're considering purchasing an electric car, now is the opportune time. Vehicles registered before April 1 will be exempt from the costly car supplement. To make payments more manageable, a direct debit can be set up with the DVLA online, allowing costs to be spread over six months.
Stamp prices
From April 7, the cost of a first-class stamp will rise by 5p to £1.70, marking the sixth price increase in three years. Second class stamps will cost 87p, a 2p increase. Royal Mail attributes these increases to a combination of fewer letters being sent and an increase in the number of households it delivers to, which escalates costs.
What can you do?
If you frequently use stamps, consider buying in bulk ahead of time. As long as the stamp does not display the price but only the class, it will remain valid.
Stamp duty
Starting next month, home buyers in England and Northern Ireland will begin paying stamp duty on properties valued over £125,000, a decrease from the current threshold of £250,000. First-time buyers, who currently pay no stamp duty on homes up to £425,000, will see this limit reduced to £300,000.
Shop prices
Inflation is already on the rise, and there are fears that it could be further fuelled by businesses passing on an increase in employers' national insurance from April. The overhaul, unveiled by Chancellor Rachel Reeves in her Autumn Budget, is expected to cost companies around £25 billion annually.
Business lobby groups suggest that some firms, including retailers, may attempt to offset this through price hikes, although the extent of this remains uncertain.
Planning application fees
Although impacting fewer individuals, households submitting planning applications for certain home improvements and renovations in England will see a surge in fees, potentially doubling in some cases. Scotland is anticipated to follow suit later this year.
For homeowners submitting a standard application for an extension, the cost will jump from £258 to £528. This increase is justified as a means to provide local authorities with additional resources to expedite the planning process.
HMRC interest rates
Another less publicised change could have significant financial implications for self-assessment taxpayers, businesses and others struggling to meet their tax obligations. The interest rate charged on late tax payments, previously set at 1.5% above the Bank of England's base rate, will leap to 4% above.
Rail fares
April will see further price increases, following the blow dealt to millions of train commuters with the rise in costs for rail cards and season tickets nationwide at the beginning of March. As part of the annual fare adjustments, regulated fares in England are set to surge by a hefty 4.6%, outpacing inflation.
Moreover, most rail cards will experience their first price hike in 12 years, with some seeing an almost 17% increase from £30 annually to £35. Last month also saw the fare cap on bus travel in England leap by 50%, rising from £2 to £3.
