With rising costs on the horizon, now is the time for households to make smart financial moves before April. From energy bills to council tax, several key expenses are set to increase. Experts like Martin Lewis are offering essential advice on how to manage these changes and reduce potential impacts.
According to DevonLive, there are a number of proactive steps you can take to ensure you’re prepared for the upcoming financial shifts.
Maximise Your ISA Allowance
The deadline for using your £20,000 ISA allowance is fast approaching, ending on April 5. By investing in a Cash ISA, Stocks and Shares ISA, or Lifetime ISA, you can protect your savings from tax.
Missing this allowance before the deadline means losing it for the year, as it cannot be carried over. Martin Lewis stressed that if you have the funds, you can fill this year’s allowance now and then add another £20,000 starting April 6.
Junior ISAs (JISAs) offer a tax-free savings option for children under 18. Parents can contribute up to £9,000 each tax year to their child’s Junior ISA.
The savings grow without tax liabilities, and children can earn up to £100 in interest without paying tax, or £200 if both parents contribute.
Consider Investing in Stocks and Shares ISAs
For those looking to invest, you can contribute up to £20,000 in a Stocks and Shares ISA. These investments are exempt from dividend tax and Capital Gains Tax, making them an attractive option for long-term savings.
However, there are risks involved, and market fluctuations can affect your investments.
If you’re saving for your first home, the Lifetime ISA offers a 25% bonus on savings, equating to up to £1,000 free per year. However, there are restrictions on withdrawals—funds must be used for purchasing your first home or for retirement, or you’ll face a 25% penalty for early withdrawal.
Claim the Marriage Tax Allowance
Married couples may be eligible for the Marriage Tax Allowance, which allows them to transfer £1,260 of their personal allowance to their partner. This could lead to tax savings of up to £1,258 for the current tax year (2024/25). It’s possible to backdate claims for the past four years, potentially reaching £1,258. The deadline to apply for backdating is April 5.
If you are responsible for the upkeep of your work uniform, you could be entitled to a tax rebate. The standard allowance for uniform costs is £60, and for basic-rate taxpayers, the rebate could be £12. Higher-rate taxpayers can reclaim £24.
Verify Your Tax Code
Many people are paying too much tax due to incorrect tax codes. It’s your responsibility to check your payslip for errors. If your tax code is incorrect, you could be due a refund for the last four tax years. Checking your tax code and addressing discrepancies directly with HMRC could lead to significant savings.
If you’ve received PPI payouts in the past, you might be eligible for a tax refund on the statutory interest within the payout. You can claim the refund for up to four years, including the 2020/21 tax year. This can be done by completing an R40 form through GOV.UK.
Top-Up Your State Pension
State pension amounts are based on your National Insurance contributions. You can purchase missing years of contributions going back to 2006. After April 5, this option will be limited to the last six tax years. In one example, an individual increased their state pension by £118,000 by paying for 18 years of unclaimed National Insurance contributions, costing around £2,968.
Starting April 1, energy prices will increase by 6.4%. For a dual fuel household paying by direct debit, the annual increase will be from £1,738 to £1,849, an additional £111 per year, or £9.25 more per month. Martin Lewis advises households to consider switching to a cheaper fixed tariff to avoid the higher rates.
Stamp Prices Are Increasing
From April 7, stamp prices will rise. A first-class stamp will increase to £1.70, up by 5p, while a second-class stamp will rise to 87p, a 2p increase. Over the last five years, the cost of a first-class stamp has more than doubled, from 76p in 2020. Lewis recommends buying stamps in advance to avoid the price hikes.
From April 1, stamp duty thresholds for property purchases will revert to lower levels. For properties in England and Northern Ireland, the threshold will drop from £425,000 to £300,000 for first-time buyers.
For others, stamp duty will apply to properties worth over £250,000 (previously £125,000). Martin Lewis highlights that this change may mean higher costs for homebuyers completing transactions after this date.
Water Bills to Increase
Starting April 1, water bills are set to rise by an average of £123 annually, from £480 to £603. Some customers, such as those with Southern Water, may see an increase of up to 47%. Martin Lewis suggests considering a water meter, especially if your household has more bedrooms than people, as this could result in cost savings.
Council tax is set to increase by 5% in most parts of England, with some areas, such as Bradford, seeing hikes as high as 10%. The average council tax for a Band D property will rise to £2,171. For those living alone, there is a potential 25% discount available for the single-person discount.
Additionally, Lewis urged people to check if they are in the correct council tax band, as up to 400,000 households may be in the wrong band and could be entitled to backdated refunds.
Reduce Broadband and Mobile Costs
Broadband and mobile providers are set to increase prices by 6-7.5% starting April 1. New regulations require providers to specify annual price increases in pounds and pence. To manage costs, Martin Lewis advises negotiating with your current provider or seeking competitive deals that offer fixed, transparent prices.
If your household earns less than £7,400 annually (excluding benefits), your children may be entitled to free school meals. Applications must be submitted by March 31 to maintain eligibility without facing regular checks in the future.
Boost Savings with the Help to Save Scheme
The Help to Save scheme offers a 50% bonus on savings for those receiving Universal Credit or Tax Credits. To qualify, you or your partner must have earned at least £722.45 in take-home pay during the last monthly assessment period.
Starting April 6, the scheme will be available to anyone earning at least £1 from employment. With savings of up to £50 per month, individuals can earn a £1,200 bonus over the course of the scheme.
With a variety of rising costs in the months ahead, these strategies offer significant opportunities for households to reduce expenses and take advantage of available savings and tax benefits before the April deadline.
