Rachel Reeves is manning the UK’s economy as Awful April hits Brits in the wallet. (Image: GETTY)
Awful April has arrived, and this year it may hit harder than usual, with the conflict in Iran threatening to send energy prices soaring.
Council tax, water, mobile and broadband bills all jumped from April 1, along with the TV licence, at a combined cost of £6.85 billion a year. The average household faces an annual increase of £214 across essential services, according to comparison site Uswitch.
There is one small positive. Gas and electricity prices have fallen by 6.6%, from £1,758 to £1,641 for a typical dual-fuel household under the Ofgem energy price cap.
But that relief may be short-lived. The cap is forecast to jump by £288 between July and September to £1,929, an increase of 18%. It could rise even further from October.
Elsewhere, it’s bad news across the board. Drivers face soaring fuel costs, with diesel accelerating past £1.80 a litre and petrol topping £1.52.
Greg Marsh, household finance expert and chief executive of Nous.co, said: “For most households, the relief from cheaper gas and electricity in April will be more than cancelled out elsewhere.”
So what’s going on, and how can you fight back?
Energy
This month’s dip in energy bills could be the calm before the storm, warned James McCaffrey, spokesperson at TotallyMoney. “Check your current contract, and if you haven’t switched in the past year, it’s likely you’ll be free to leave.”
Acting now to fix a deal could soften the blow before prices rise again from July. Outfox Energy, Fuse, E.ON Next, Sainsbury’s and EDF Energy are offering competitive deals fixing bills for between one and two years.
Water
Water bills are also rising, increasing by an average of £33 to £639 a year, with sharper hikes in some areas.
Unlike energy, you can’t switch suppliers, McCaffrey noted. “But if you’re looking to cut costs, it might be worth applying to have a water meter installed.”
If a provider cannot install one, it must offer an ‘assessed charge’ to reduce costs. “Around 2.5million households are also eligible for social tariffs, with average discounts of around 40%,” he added.
Taxing
Local authorities can raise bills by up to 4.99%, and most have done exactly that. Seven councils have been allowed to exceed this, including North Somerset and Shropshire, at nearly 9%.
Matt Brewer, utilities expert at Compare the Market, said: “If your council tax is going up, check whether you’re eligible for discounts or reductions.”
Single occupants are entitled to a 25% discount. Those on low incomes can apply for reductions of up to 100%, while carers and people with disabilities may also qualify.
Digital squeeze
BT, EE, Sky, Virgin Media and other broadband providers are hiking prices, with the average increase costing £39.60 a year.
Around eight million customers, one in four, are out of contract and free to shop around.
Switching broadband may sound daunting, but a new process called One Touch Switch handles the transition, said Max Beckett, telecoms expert at Uswitch.com. “Your new provider manages the switch so you won’t be left offline.”
Mobile bills are rising by an average of £27.60 a year. “If out of contract, you can move to a different provider and potentially save hundreds of pounds.”
Moving from an expiring 24-month handset contract to a SIM-only deal could save £304 per year. Lebara, SMARTY, Asda, VOXI, Talkmobile, giffgaff, spusu and iD Mobile offer low-cost plans without mid-contract price rises.
“By texting INFO to 85075, mobile customers can check their contract status and exit fees,” Beckett added.
Dividends
On April 6, Chancellor Rachel Reeves introduced a 2% surcharge on dividends from shares held outside an ISA.
The dividend allowance is now just £500. Anything above this is taxed at 10.75% for basic rate taxpayers, 35.75% for higher rate taxpayers and 39.35% for additional rate taxpayers.
Isabella Galliers-Pratt, senior investment director at Rathbones, said more dividend income is now being taxed than before, urging investors to make full use of ISA and pension tax breaks.
Other Costs
Other charges are rising too. The TV licence fee rises by £5.50 to £180 a year. A second-class stamp increases by 4p to 91p, while first-class stamps rise by 10p to £1.80.
Car tax is climbing to a standard £200 rate for most vehicles, including electric cars, with an additional £425 annual charge for more expensive models.
Air passenger duty is also increasing, pushing up holiday costs. Premium Bonds have a lower chance of winning: the prize fund rate is cut from 3.6% to 3.3%, and the odds lengthen from 22,000-1 to 23,000-1.
At the same time, income tax bands remain frozen, dragging more people into higher tax brackets, especially pensioners. This fiscal drag affects income tax, inheritance tax and more, eroding pay rises and increasing the overall burden.
There is at least a small silver lining. Millions of benefits claimants and state pensioners will see payments rise this month.
Benefits linked to inflation are increasing by 3.8%, while both the basic and new state pensions are rising by 4.8%, offering some protection through the triple lock.
April may be awful, and it could get worse if global tensions continue to drive up energy costs. Even so, there are still ways to fight back. Use every option available.