How to dodge the April bill hike bombshell (and you could save £3000)

Brace yourself! This Saturday is national price hike day. Energy and broadband bills, water rates, taxes, even NHS prescriptions — you name it, the cost is likely to rise in April.

Some increases will happen on April 1, others over the following week.

It will put extra pressure on squeezed families nationwide, who are already contending with soaring food bills.

Demands: Around 2.5 million households missed or defaulted on ‘must pay’ domestic outgoings, loans or credit card payments in March

Around 2.5 million households missed or defaulted on ‘must pay’ domestic outgoings, loans or credit card payments in March, according to Which?.

Thankfully, Bank of England governor Andrew Bailey said this week that inflation will ease by the summer. 

But that only means prices will be rising less quickly than the current rate of 10.4 per cent on the consumer price index — a level that Chancellor Jeremy Hunt has called ‘dangerously high’.

There is some good news from high inflation — the state pension and many benefits will receive a 10.1 per cent boost next month. But many families and pensioners will be wondering how to protect their cash from the crunch.

Follow Money Mail’s action plan to fight back. You may find the potential savings wipe out the impact of the price hikes altogether.

Energy Bills

Although wholesale prices are falling, the energy crisis is far from over.

The Government has confirmed that the current cap on energy bills will remain at £2,500 a year for the average household. Yet households will still find themselves paying more from April 1.

The energy support scheme, which provided six instalments of £66 and £67 a month, is coming to an end. This means households will be £400 worse off in the coming months.

But some help is at hand. Low-income households on means-tested benefits such as universal credit will receive £900 in three instalments. 

Electric shock: The energy support scheme, which instalments of £66 and £67 a month, is coming to an end. This means households will be £400 worse off in the coming months

Furthermore, eight million pensioner households will be paid £300 in a single instalment next winter, on top of winter fuel payments. Those on certain disability benefits will also receive an additional £150.

Households can achieve considerable savings by making simple changes around the home. Ditching your tumble dryer could save £70 a year, according to the Energy Savings Trust; and turning down your thermostat by one degree saves £145.

According to comparison site Uswitch, turning appliances such as televisions and music speakers off at the wall when they are not in use can cut bills by £55 a year.

Make instant savings if you have a combi boiler by lowering the flow temperature — which is how hot the water gets before being sent off to your radiators. 

Turning this down to 55c can cut £112 off the average annual bill, according to independent consumer adviser The Heating Hub. 

And energy firm Octopus claims that using an electric blanket on a bed rather than keeping the heating on could save £150 on gas bills over three months.

This means that while energy costs will rise by £400, you can make a combined £532 in savings by avoiding the tumble dryer, turning down your thermostat, using an electric blanket, turning devices off at the plug and lowering the temperature on your boiler.

Typical price hike: £400 a year

Potential savings: £532 a year

Broadband and Mobile

Telecoms giants BT, EE, Sky, Virgin Media O2, Vodafone and TalkTalk will all increase bills for tens of millions of customers from April 1 under price rise rates already baked into contracts. 

Customers across all providers will face inflation-busting rises of 14.4 per cent. This means the average user, currently paying £333 a year for broadband, would see bills hiked by £47.95 to £380.95.

If you are struggling to pay, ask your provider if they offer a discounted social tariff, which is typically priced at around £10 or £20 a month. 

You must receive some form of welfare support, such as universal credit or pension credit, to be eligible.

Broadband hikes: Customers across all broadband providers will face inflation-busting price rises of 14.4%

You can also make savings by threatening to switch supplier or negotiating a better deal over the phone. Customers who haggled reported average annual savings of £43 in a Which? survey.

TV and broadband customers who did go ahead and downgrade to a cheaper service that still suited their needs saved £213 on annual bills. 

Meanwhile, the average annual mobile phone bill is £307, according to household finance app Nous.co. This will rise by £44 to £351.

When you enter into a phone contract, you are typically charged for two elements. One is to cover the cost of the handset, while the other is for airtime — which is the package of calls, texts and data.

Almost eight million people are out of contract and could save on average £321 a year by moving to a new Sim-only deal, says Uswitch.

Broadband and mobile bills may be rising by a combined £91.95 this year but you can offset this with enormous savings of £577 by moving to a Sim-only deal, haggling on your contract and downgrading your deal.

Typical price hike: £91.95 a year

Potential savings: £577 a year

Water

Charges for water in England are set to rise by an average of 7.5 per cent in April — the biggest increase in almost two decades.

Customers will pay £31 more than last year on average, taking the typical annual bill to £448. In Scotland, bills are set to rise by 5 per cent.

If you don’t have a water meter, you will be charged a set amount regardless of how much water you use.

Most water companies have a social tariff for financially vulnerable customers or those receiving certain benefits — ask your supplier.

Consider switching to a water meter — and if you have one, the best way to combat rising costs is by using less water.

The average household could save £70 a year by limiting their shower time to four minutes, according to Uswitch. Taking a four-minute shower instead of a bath once a week could save £12 a year.

These two measures would cut your bills by £82 a year, more than sparing you the £31 bill increase.

Typical price hike: £31 a year

Potential savings: £82 a year

Prescriptions

The price of an NHS prescription is rising by 30p, or 3.2 per cent, from £9.35 to £9.65 on April 1.

The cost of prescription pre-payment certificates, which cover multiple prescriptions for a set price, is also increasing by £1 to £31.25 for three months and by £3.50 to £111.60 for 12 months.

If you buy numerous prescriptions a year, you can beat this price hike by buying an annual prescription ‘season ticket’ before April 1. 

Bitter pill to swallow: The price of an NHS prescription is rising by 30p, or 3%, from £9.35 to £9.65 on April 1

This costs £108.10 annually for two prescriptions a month, while buying them individually would set you back £224.40 a year.

At current prices, someone paying for two items per month on prescription could save £116.30 per year with a season ticket, £228.50 for three items a month; and £340.70 for four items each month, according to Which?.

Buy a ‘season ticket’ online at nhs.uk, over the phone on 0300 330 1341 or at a pharmacy.

It’s also worth checking whether you are eligible for free prescriptions. This is the case for anyone over the age of 60 or below 16, and up to 18 if they are in full-time education.

You will also qualify if you receive income support or a benefit, such as universal credit and jobseeker’s allowance.

Price hike: £7.20 a year (for two prescriptions a month)

Savings: £116.30 a year (for two prescriptions a month, if you buy certificate before April 1)

Capital gains tax

The Government is clamping down on the profits you make when you sell investments that have increased in value, such as shares and second homes.

From April 6, the profit you can make before you owe capital gains tax (CGT) each year will be halved, falling from £12,300 to £6,150.

Above this, basic-rate taxpayers must hand over 10 per cent of their profits to the taxman, but for higher-rate taxpayers this rises to 20 per cent.

When selling a property, basic-rate taxpayers owe 18 per cent of their gains in CGT. For higher-rate taxpayers it’s 28 per cent. This does not apply to your main residence.

Allowance cut: From April 6, the profit you can make before you owe capital gains tax each year will be halved, falling from £12,300 to £6,150

The easiest way to reduce CGT is to move your investments into an Isa or pension, where dividends and gains are tax-free. 

From April 6, you can put up to £60,000 into a pension and claim full tax relief, rising from £40,000.

You can also carry forward unused pension allowances from the previous three years, as long as you don’t deposit more money than you earn in a single year. Doing so will also allow you to benefit from tax relief.

But it’s worth remembering that you cannot access the money before you reach pension age — currently 55.

You can also put up to £20,000 into an Isa each year. Sheltering £10,000 of profit in an Isa before April 6 would save higher-rate taxpayers £800 and basic-rate taxpayers £400, according to stockbroker Interactive Investor.

If you have spare Isa allowance, you can transfer your profits through a process known as ‘Bed and Isa’.

This is where you sell an investment and buy the same investment back within your Isa. Ask your Isa provider about this, as there are special forms to fill in.

But you must act fast. Check the deadline for instructing the move with your Isa provider, as it can vary. 

Investors have until April 5 to put in a request with stockbroker Hargreaves Lansdown, while the window shuts on March 31 for Interactive Investor. Late applications will be dealt with on a ‘best endeavour’ basis.

If your gains are high, you can also transfer some of these assets to your spouse to make use of their allowances.

These tax allowances cannot be carried forward, so it’s important to act now.

From April 2024, the capital gains thresholds will halve again to £3,000.

Typical price hike: £800 (for a higher-rate taxpayer with £10,000 invested)

Potential savings: £800

Dividend allowance

Investors and self-employed workers who pay themselves in dividends will also take a knock, as the tax allowance is reduced next week.

From April 6 the tax-free allowance on dividend income will be cut from £2,000 to £1,000. In April 2024 this will be halved again to just £500. 

Investors will be charged 8.75 per cent on earnings over these thresholds, with higher and additional rate investors paying 33.75 per cent and 39.25 per cent respectively.

This means a basic-rate taxpayer will have to pay £88 in tax on £2,000 of dividends payments from next week, according to Interactive Investor.

Higher-rate taxpayers will have to pay £338 on £2,000 of dividend rewards. Previously these would have been tax-free.

Savers who have built up substantial investment income outside of an Isa may want to sell now to bank some profit before the lower capital gains tax allowances come into play.

Self-employed workers can save into a personal or self-invested personal pension, which would entitle them to the same tax reliefs as employees on PAYE.

Either of these measures could shelter you from a sudden £338 tax bill.

Typical price hike: £338 (For a higher-rate taxpayer on £2,000 of dividend income)

Potential savings: £338

Stamps

First-class stamps will cost more than £1 for the first time next month, rising by 16 per cent from 95p to £1.10 on April 3. Second-class stamps will also be more expensive, increasing from 68p to 75p.

Stock up at old prices before they change — but make sure you buy the new barcoded versions. Royal Mail has extended the deadline for how long you can use old non-barcoded stamps, but only until July 31.

Save £7.50 on a sheet of 50 first-class stamps or £3.50 on 50 second-class stamps and avoid the combined £11 increase if you buy on April 2.

Typical price hike: £11 (for 50 first class and 50 second class)

Potential savings: £11

Council tax

Local authorities have been given permission to increase council tax by up to 5 per cent from April 1.

Previously, councils could only hike the bills by 3 per cent without a referendum — but this upper limit was increased by the Chancellor in his Autumn Statement to plug the gaps in public finances.

For a family living in a property with a Band D rating, this will push their annual council tax bill above £2,000 for the first time, according to the Department for Levelling Up.

Squeezed: Local authorities have been given permission to increase council tax by up to 5% from April 1

They will now pay £2,065 a year on average — an increase of £99.

In some areas, the rises are even steeper. For example, in Croydon, South London, council tax will rise by 15 per cent to fund the local authority’s debts. 

The council, which faces bankruptcy, was given special permission by the Government to breach the 5 per cent upper limit without a referendum.

A family living in a Band D property in the area will pay £2,239.56 in council tax, up £273.90 in a year.

Slough and Thurrock are also hiking taxes by 10 pc to shore up their finances.

In Scotland and Wales there is no cap on how much local authorities can increase taxes this year.

You can apply for a discount or challenge your council tax band.

If you live alone, have a live-in carer or share a property with a student or someone with a severe mental illness, you may be entitled to a 25 per cent council tax discount.

For someone living in a Band D property, this would wipe £516.25 off the average annual bill. If you think you are in the wrong tax band, you may be able to save hundreds of pounds by challenging it. Look up the bands of similar properties in your area.

You can make a challenge through the government website by visiting gov.uk/council-tax-bands, or by calling the Valuation Office Agency on 03000 501 501 in England and 03000 505 505 in Wales.

Be warned, though — appealing your band could result in you and your neighbours being bumped into a higher band.

Typical price hike: £99 (for a property in Band D)

Potential savings: £516.25 (if you successfully apply for a 25 pc discount)

Total savings

Overall, your annual bills will rise by £1,778 from the beginning of April, but if you follow all of our tips and were able to claim the perks you could save a total of £2,973 over the course of the year.

Total price hike: £1,778

Total potential savings: £2,973

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