HOUSEHOLDS need to be aware of a raft of new laws and financial changes coming into force next month.
Ranging from bill hikes to rule changes for first-time buyers and pensioners, plenty of them come into effect as we enter a new tax year.
The current tax year is set to end next month on April 5, so it's best to get prepared while you can.
There are also good news for people on benefits next month, with payments set to rise for millions of households.
Below we round up the major changes set to kick in.
1. Mortgage guarantee scheme launches
A new government scheme will let first-time buyers get on the property ladder with just a 5% deposit.
It was announced as part of the Budget, with multiple lenders including NatWest and Lloyds to start offering 95% mortgage deals from April.
It means under the mortgage guarantee programme, house buyers will need just a £10,000 deposit to be able to afford a £200,000 home.
Under the scheme, the government will guarantee part of borrowers home loans, reducing the risk on the loans.
Many lenders scrapped such high loan to value mortgage deals amid uncertainty over how the pandemic would impact jobs and the economy.
2. Car tax hikes
Vehicle Excise Duty (VED), known more commonly as car tax, is rising from April 1.
It normally increases each year with inflation, and this year is no different.
What you pay depends on how much CO2 your car pumps out.
If your car was registered on or after April 1 2017, you will have to pay the following for the first 12 months:
- You won’t have to pay anything if your car emits no CO2
- £10 if your car emits 1-50 grams per kilometre of CO2 (the same tax rate as last year).
- £25 if your car emits 51-75 grams per kilometre of CO2 (the same tax rate as last year
- £115 if your car emits 76-90 grams per kilometre of CO2 (£5 extra than last year)
- £140 if your car emits 91-100 grams per kilometre of CO2 (£5 extra than last year)
There are 13 pay brackets in total, and the highest you’ll be paying is £2,245 if your vehicle emits over 255g per kilometre of CO2, marking an increase of £70 since last year.
You can check out the full list of changes for motorists in our guide.
3. Driving lessons and tests to restart
If you’re learning to drive, you could get back behind the wheel again on April 12.
Millions of Brits had to put plans to learn how to drive on hold during lockdown.
But the PM’s roadmap plans could see budding drivers take up lessons again next month – and this applies to those wanting to take theory tests too.
If you want to take a practical car driving test, you’ll have to wait a little longer.
These tests are earmarked to resume on April 22 at the earliest.
4. Help to Buy scheme changes
The current Help to Buy equity loan scheme is ending on March 31, and willinstead be replaced with a similar scheme.
The new version of the government programme is already open for new applicants, meaning buyers can reserve homes to move into from April 1.
Under the new scheme, the government will still lend you up to 20% – or 40% in London – of the cost of a new-build home.
You'll also need to fork out at least 5% of the total property value for a deposit and this time you have to get a mortgage for at least 25% or more to make up the rest.
Under the old scheme, the property value had to be worth less than £600,000 in order for you to qualify for a loan.
But loans under the new scheme will be capped at 1.5 times the average first-time buyer property price by region in England.
5. Council tax increase
Households could see their council tax bills jump by up to 5% in April – adding over £100 more to their bill.
The Treasury gave the green light for the tax hike in last year’s spending review, with the extra cash raised earmarked to pay for rising police and social care costs.
Over half of councils are looking to bump up bills by 5%, according to research from the Local Government Chronicle.
You can check on the gov.uk website to see how much your council tax is by looking at which band you’re in.
You might also want to ask your local council ahead of April to see whether they are planning a tax hike.
Check out our guide on how to lower your council tax bill.
6. State pension rise
Retirees will get up to £230 extra a year in their state pension from April.
It comes thanks to the triple lock system, which means pensions increase every year in line with inflation, earnings, or 2.5% – whichever is highest.
The 2.5% state pension increase was confirmed after the consumer prices index (CPI) level of inflation reached 0.5% for September.
The move means the new state pension will rise by £4.40 a week to £179.60 in April next year – an increase of £228.80 over the year.
While the old basic state pension will increase by £3.40 a week to £137.65 – giving pensioners an extra £176.80 over 12 months.
7. National Living Wage hike
Millions of workers are also set for a pay rise next month as the National Living Wage increases to £8.91 an hour.
The hike, which was confirmed by Chancellor Rishi Sunak in the Budget,means it'll rise by 19p to £8.91 – an increase of 2.2%.
This is the equivalent of £345 extra per year for someone working full-time.
The wage boost will also apply to 23 and 24-year-olds. Currently, the national living wage is only available to those aged 25 or above.
What is the National Living Wage?
THE national living wage is the government’s minimum rate employers are allowed to pay workers for each hour.
It was introduced by Tony Blair's New Labour government in 1999 and was originally called the national minimum wage.
Meanwhile, the minimum rate for those under 23 continues to be known as the national minimum wage.
Here are the new wage rates that will come into play from April 2021:
- Rate for people aged 23 and older and above to increase by 2.2% from £8.72 to £8.91 per hour
- Rate for people aged 21 to 22 years old to increase by 2% from £8.20 to £8.36 per hour
- Rate for people aged 18 to 20 years old to increase by 1.7% from £6.45 to £6.56 per hour
- Rate for people aged 16 to 17 years old to increase by 1.5% from £4.55 to £4.62 per hour
- Rate for apprentices to increase by 3.6% from £4.15 to £4.30 per hour
8. Statutory Sick Pay increase
Statutory Sick Pay (SSP) rates are changing from the start of the new tax year from April 6.
The amount you need to earn to qualify will remain at £120 a week, but the payments will rise to from £95.85 to £96.35 a week – a hike of 50p.
To get the payment, you need to be classed as an "employee" and have done some work for your employer.
Although agency workers are also entitled to Statutory Sick Pay.
9. Family leave and maternity pay rise
Similarly, the rate of pay for maternity, paternity, adoption and shared parental pay is also increasing to £151.97 a week from next month.
This is a 77p boost compared to its current weekly £151.20 rate.
The increase normally occurs on the first Sunday in April, which is April 4 this year.
10. Income tax thresholds rise
The amount you can earn without paying income tax – known as the personal allowance – is rising from the new tax year in April.
In the current tax year running from April 6, 2020, to April 5, 2021, that amount is £12,500.
But from next month, it'll rise to £12,570 for basic-rate taxpayers and £50,270 for higher rate tax payers.
It means basic-rate taxpayers (those earning between £12,501 and £50,000) will earn an extra £14 a year.
While higher-rate taxpayers will get a maximum pay boost of £68 a year.
However, Mr Sunak then plans to hold these thresholds until 2026.
The freeze is essentially a pay cut for millions of Brits, once you take into account the rate of inflation.
You can calculate what your take home pay is depending on your salary by using MoneySavingExpert's free online calculator.
11. New energy price cap kicks in
Energy bills are set to rise by up to £96 a year for many households from April due to an increase in the price cap.
It comes as regulator Ofgem has upped the maximum price suppliers can charge for electricity and gas from £1,042 a year to £1,138.
The cap affects around 11million households on standard variable tariffs.
Around 4million households on prepayment meters will also see bills rise by £87, to £1,156.
You can save money by switching though – below we explain how.
How to save on your energy bills
SWITCHING energy providers can sound like a hassle – but fortunately it’s pretty straight forward to change supplier – and save lots of cash.
Shop around – If you're on an SVT deal you are likely throwing away more than £300 a year. Use a comparion site such as MoneySuperMarket.com, uSwitch or EnergyHelpline.com to see what deals are available to you.
The cheapest deals are usually found online and are fixed deals – meaning you'll pay a fixed amount usually for 12 months.
Switch – When you've found one, all you have to do is contact the new supplier.
It helps to have the following information – which you can find on your bill – to hand to give the new supplier.
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you pay
- An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
12. Advance Universal Credit payment change
Universal Credit claimants will be given 24 months to repay advance loans from next month.
An advance payment is a loan that you can ask for to help you through the five-week wait for your first Universal Credit payment.
Claimants who have taken out a loan are currently expected to pay it back within the first 12 months of getting it.
However, that time is set to double to 24 months from April 12, 2021.
From next month, the deduction rate will also be reduced to 25% of the standard allowance, down from 30%.
The extended repayment period will only apply to new advance payments taken out from April.
It means claimants will get to keep £30 more of their monthly payments, according to DWP estimates.
Meanwhile, existing claimants will need to repay the loans within 12 months but they'll still benefit from the reduced deduction rate.
13. Working tax credit £500 payment
Brits who claim working tax credit will be able to get a one-off payment worth £500 in April to help them through the Covid crisis.
The payout, which was announced in the Budget, is supposed to echo the six month extension to the £20 boost in Universal Credit payments.
You don't need to apply to get the new payment.
HMRC will text you or send you a letter to confirm if you’re eligible for the payment.
If you’re eligible, you should be paid automatically by April 23.
14. Child benefit is rising
Millions of households will get a child benefit payment boost from April.
Child benefit is paid to families with kids up to the age of 16 – or 20 if they are in full-time education or registered on a government-approved course.
For the eldest child, or if you only have one, households currently get £21.05 per week plus £13.95 for any additional kids.
From April 12, this will increase by 10p to £21.15 per week and by 5p to £14 per week for additional children.
It means the monthly payments will be £84.60 for an eldest or only child, up from £84.20, and £56 for any additional children, up from £55.80.
Over the course of 12 months, this will boost your payments by £5.20 for an eldest or only child, and by £2.60 for any additional children.
The payment comes through every four weeks on a Monday or a Tuesday and the claimant will also be awarded national insurance credits which can count towards their state pension.
However, if a claimant or their partner earns more than £50,000 a year, keep in mind a fraction of it must be repaid at the end of the tax year.
This is at a rate of 1% for every £100 earned over £50,000. If over £60,000 is earned in a year, the whole amount must be repaid.
We explain how to claim child benefit.
15. Universal Credit payments rise
Universal Credit payments will rise as follows for the 2021/2022 financial year from April.
This comes on top of the six-month extension to the weekly £20 boost.
How much you're entitled to depends on your individual circumstances, including your age, whether you have any disability and if you have children or are a carer.
Standard allowance (per month)
- For those single and aged under 25, the standard allowance will rise from £256.05 to £257.33 (this is lower than the 2020 amount of £342.72, which includes the coronavirus boost)
- For those single and aged 25 or over, the standard allowance will rise from £323.22 to £324.84 (this is lower than the 2020 amount of £409.89, which includes the coronavirus boost)
- For joint claimants both under 25, the standard allowance will rise from £401.92 to £403.93 (this is is lower than the 2020 amount of£488.59, which includes the coronavirus boost)
- For joint claimants where one or both are 25 or over, the standard allowance will rise from £507.37 to £509.91 (this is lower than the 2020 amount of £594.04, which includes the coronavirus boost)
Extra amounts for children
- For those with a first child born before April 6, 2017, the extra amount is going up from £281.25 to £282.50
- For those with a child born on or after April 6, 2017 or second child and subsequent child, the extra amount is going up from £235.83 to £237.08
- For those with a disabled child, the lower rate addition payment is going up from £128.25 to £128.89 and the higher rate from £400.29 to £402.12
Extra amounts for limited capability for work
- For those deemed to have limited capability for work, the extra amount is going up from £128.25 to £128.89
- For those deemed to have limited capability for work or work-related activity, the extra amount is going up from £341.92 to £343.63
Extra amounts for being a carer
Universal Credit claimants can get an additional amount if you're caring for a severely disabled person for at least 35 hours a week.
The amount you get a month will rise from £162.92 to £163.73.
Increased work allowance
- The higher work allowance (no housing amount) for someone claiming Universal Credit with one or more dependent children or limited capability for work is going up from £512 to £515
- The lower work allowance for someone claiming Universal Credit with one or more dependent children or limited capability for work is going up from £292 to £293
16. Other benefits going up in April
Those still claiming benefits from the old system – known as legacy benefits – will also get more money.
Legacy benefits include job seeker's allowance, employment and support allowance, income support and housing benefit.
You can’t make a new claim for these benefits anymore, but many people who haven’t yet moved to Universal Credit are still claiming them.
Here are the other benefits increasing from April 6 2021 and the weekly amounts for each.
- Attendance Allowance higher rate rises to £89.60 (from £89.15), lower rate rises to £60.00 (from £59.70)
- Carers Allowance rises to £67.60 (from £67.25)
- Disability Living Allowance care component highest amount rises to £89.60 (from £89.15), the middle amount rises to £60.00 (from £59.70) and the lowest amount goes up to £23.70 (from £23.60)
- Disability Living Allowance mobility component higher amount rises to £62.55 (from £62.25) and the lower amount goes up to £23.70 (from £23.60)
- Employment and Support Allowance for under 25s goes up to £59.20 (from £58.90 and for those aged 25 and over, rises to £74.70 (from £74.35).
- Housing benefit rises to £59.20 (from £58.90) for under 25s and to £74.70 (from £74.35) for 25s and over, while those entitled to main phase ESA will get £74.70 (up from £74.35).
- Incapacity Benefit (long-term) rises to £114.70 (from £114.15).
- Contributions-based Jobseekers Allowance rises from £59.20 (from £58.90) for under 25s and to £74.70 (from £74.35 for those 25 and over.
- Income-based Jobseekers Allowance rises to £59.20 (from £58.90) for under 25s and to £74.70 (from £74.35) for those 25 and over.
- Maternity, paternity and shared parental pay is rising to £151.97 (from £151.20).
- Pension Credit is rising to £177.10 (from £173.75).
- Personal Independence Payment (PIP) daily living component is rising to £89.60 (from £89.15) for enhanced and £60 (from £59.70) for standard.
- Personal Independence Payment mobility component is rising to £62.55 (from £62.25) for enhanced and to £23.70 (from £23.60) for standard.
17. NHS prescription charge hike
Prescription items are currently £9.15, but will go up to £9.35 in England from April 1.
It comes after the price was increased by 15p last year, and 20p in both 2019 and 2018.
The cost was £7.40 ten years ago, in 2011.
From April 1, the price of a three-month prescription will also rise to £30.25 (up by 60p) and a 12-month prescription will be £108.10 (a hike of £2.20).
Pharmacy bodies have long called for England to scrap the prescription charge.
Wales, Scotland and Northern Ireland don't have charges on prescriptions.
18. TV licence fee increase
The TV licence fee is to rise from £157.50 to £159 from April 1.
Telly watchers legally have to pay the annual fee whether they're watching live TV or on BBC iPlayer on any device.
It means bill payers will have to fork out £3.05 a week, up from £3.03 a week currently.
The cost of an annual black and white licence will also rise from £53 to £53.50.
The licence fee, which funds the BBC, is set by the government and has risen in line with inflation every year since 2017.
19. Lifetime Isa rule change
The government changed the rules around Lifetime Isas (Lisa) last year to help savers that might be struggling with coronavirus.
Lifetime Isas are designed to help people save for a first home or a pension, meaning there are penalties if you use your money for anything else.
Under the normal rules, if you take your money out for other reasons the government charges you 25% meaning you lose your government top-up as well as some of your original savings.
But the new rules mean that you only pay a charge of 20% which means you only lose the government bonus and not any of the cash you put away.
You're still giving up your free government cash, so you should exhaust your other options before raiding your Lisa.
These changes are currently only in force until the end of the tax year in April, so if you want to access your cash you need to do so before then.
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