MILLIONS of households will have to pay more for essentials such as food and bills as the cost of living continues to rise this year.
Many of the hikes will be introduced at the beginning of the new financial year in April and it helps to be prepared they don’t come as a shock.
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Gas and electricity bills will go up from April as that’s when the energy price gap increase will be introduced.
Mobile phone and broadband costs will also rise for many families across the UK.
A hike to inflation rates in December, and a second increase expected this month, will have an impact on mortgage rates.
Meanwhile, tax bills will shoot up in 2022 as national insurance and council tax rates will rise.
It helps to be aware of all the changes that are coming and how much they will cost you, so you can take steps to budget and protect your finances.
We explain how to calculate how much your bills will go up this year as the cost of living crisis rumbles on.
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Energy bills
The energy price cap will be reviewed in February and any changes will come into force from April.
The energy price cap limits how much suppliers can charge for default tariffs, and it’s set to go up this year.
It’s reviewed every six months, with the next update set for February 7.
Millions of households have come off cheap fixed tariffs when their previous suppliers have gone bust, meaning they’re protected by the price cap.
But the cap is expected to go up from £1,277 to £1,900 for an average household.
That means millions of Brits will be paying an extra £600 a year for energy bills when the new limit is introduced in April.
That breaks down to a monthly rise of £50, but the actual increase will depend on your energy usage and how efficient your home and appliances are.
Mobile and broadband bills
Many UK mobile networks and broadband providers are preparing to hike their prices from April.
EE, Vodafone and BT pay monthly customers will see their bills rise by 9.3% later this year.
A Sun investigation found that EE – which is owned by BT – is increasing prices by as much as £73.68 a year.
O2 is yet to announce how much payments will increase by, but that will be revealed in February.
You can’t get out of these mid-contract hikes as they’re in the agreement you signed.
Check your contract to find out how much you currently pay. Your provider will get in touch to tell you how much it will increase by.
Mortgage rates
The Bank of England is preparing to raise interest rates at a meeting this week after voting through a rise in December.
That could have a knock on impact on your mortgage payments.
The Bank raised rates to 0.25% at the end of last year, for the first time since August 2018, and lenders hiked their rates within hours.
Following the rise, Santander said all of its tracker mortgage products linked to the Bank’s base rate would increase by 0.15 percentage points.
Its Follow on Rate (FoR) jumped to 3.5% and the Standard Variable Rate (SVR) will rose by 0.15 percentage points.
Barclays’ SVR increased from 4.59% to 4.74% following the hike and the Alliance & Leicester and Santander SVRs increase to 4.49%.
The Bank’s monetary policy committee will meet on Thursday to vote on whether to increase for a second time.
Rate rises are bad for anyone with debt – particularly if you’re not locked into a fixed rate – and your mortgage repayments could be affected.
Keep an eye out for the Bank’s announcement this week.
If rates rise, your mortgage provider will get in touch to let you know how it will affect you.
National Insurance
National insurance rates are going to rise in April, with the Prime Minister determined to push ahead with the controversial plan.
The tax will go up 1.25 percentage points this year, meaning workers will pay hundreds of pounds extra a year.
The exact amount you’ll pay is dependant on your salary.
It will add £130 a year to the tax bill of Brits on a £20,000 salary, and £255 for those who earn £30,000.
People on £50,000 will pay £505 extra annually, those on £80,000 will have to fork out £880 and earners on £100,000 face a £1,130 bill.
The proceeds will be used to pay for health and social care reforms and clear the Covid backlog
To find out how much extra you’ll pay, work out what 13.25% of your annual salary is.
Rail fares
Rail fares are set to rise by 3.8% this year, the Department of Transport confirmed in December, in the biggest hike to train ticket costs in a decade.
This jump will happen in March and could add hundreds of pounds to the travel costs of commuters who can’t drive or walk to work.
For example, an annual commute from Oxford to London including a London travelcard will increase by £245 to £6,700.
A yearly ticket from Tunbridge Wells to London including travel card will rise by more than £220 to £6,033.
And the commute from Macclesfield to Manchester will leap by £84 to £2,284 a year.
The amount you’ll be charged depends on which routes you take, how frequently you travel and whether you’re eligible for a Railcard discount.
You can work out how much extra you’ll pay by finding out the cost of your current annual ticket and adding 3.8%.
Council tax
Families in England will be hit with bigger bills this year as local governments increase council tax rates by up to 5%.
Council tax funds state schools and local services such as rubbish collections.
Chancellor Rishi Sunak announced in the latest budget that local authorities could hike the rates by up to 3% without having to hold a referendum.
On top of that, they can add an additional 2% which is ringfenced for adult social care.
Some could add even more to the adult social care portion, as it can be carried over from last year.
The amount you’ll pay is determined by the local council and depends which “band” the property you live in falls under.
Check which council tax band your property falls under to work out how much the increase will cost you.
You can find your local council by using the gov.uk search tool.
You’ll then be sent a council tax bill in April outlining how much you owe.
Residents can choose to make payments over a period of 10 months.
You can also opt to pay an instalments over 12 months if you prefer – although you won’t benefit from a pause in payments at the end of 2022.
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