Voters are facing an April Fools Day tax nightmare as a swathe of cost increase come into effect, hammering their finances.
Council tax and energy bills are set to go up from April 1, adding to the cost of running a home, even before Rachel Reeves gave her Spring Statement.
On top of that, a rise in the rate of National Insurance Contributions (NICs) for businesses could see prices rise everywhere from supermarkets to the local pub.
The rise is also already having an impact on jobs, as firms cancel or delay hiring due to increased costs.
Vehicle excise duty rates are also increasing – and now even owners of electric cars will have to pay.
Those seeking to buy a house will also have to pay more as some stamp duty rates increase.
And this hammer blow of tax rises comes ahead of possible trade tariffs introduced by the Trump administration in the US.
Trump has christened April 2 ‘Liberation Day’, vowing to impose ‘reciprocal’ levies offsetting those of all trading partners.
Council tax and energy bills are set to go up from April 1, adding to the cost of running a home. On top of that, a rise in the rate of National Insurance Contributions (NICs) for businesses could see prices rise everywhere from supermarkets to the local pub.
Trump has christened April 2 ‘Liberation Day’, vowing to impose ‘reciprocal’ levies offsetting those of all trading partners.
Council tax surge across England
Struggling families will pay record levels of council tax this year after millions were hit with inflation-busting bills.
Homes across England face paying an average of £2,280 after almost all town halls raised the tax by the maximum 5 per cent allowed, official figures confirmed yesterday.
It means rates for a standard Band D property have soared by 20 per cent in just five years.
And it comes as residents in Birmingham – where bills are up 17.5 per cent in two years – chased bin lorries down the street after a week-long strike left piles of rubbish sacks standing waist high, with rats running rampant.
Hundreds of thousands of households will have to fork out more than £2,500 for council services this year, the new data revealed, while increasing numbers will pay more than £5,000.
Residents in six parts of England face increases above the usual 5 per cent after ministers agreed their struggling town halls needed more cash.
The Conservatives have accused Labour of forcing town halls nationwide to hike bills after Rachel Reeves’ Budget increased National Insurance contributions they have to pay for staff.
Of the 384 authorities covered by the government’s cap – set at 4.99 per cent apart from a few in dire circumstances – 293 are imposing as much as they were allowed.
Bin there, not done that: The scene in Birmingham
The 5 per cent increase is above inflation and comes after a series of eye-watering hikes
Another 56 are ‘close’ to the ceiling, according to official figures released today. Just eight either froze or cut their Band D charge.
However, despite the eye-watering extra costs for families, councils have already been warning that they will struggle to make ends meet due to pressure on services.
NICS increase scaring businesses
Businesses were blindsided by Ms Reeves’ decision to hike NI by 1.2 percentage points to 15 per cent from April, while a higher minimum wage and new employment rules will compound the pressure on firms.
Labour also lowered the threshold for when firms start paying employer NI contributions – a pressure point for firms who employ many young people on a part-time basis.
The Government has said £25billion of extra revenues raised from higher taxes on businesses will help fill a gap in the UK’s public finances and be plugged into things like infrastructure and the public sector.
Vacancies were effectively stalled in the three months to February, as experts warned there is little sign of ‘momentum’ as ‘choppier waters’ loom
But official figures last week showed the jobs market on hold as businesses brace for Labour’s national insurance bomb.
Vacancies were effectively stalled in the three months to February, as experts warned there is little sign of ‘momentum’ as ‘choppier waters’ loom.
Unemployment also remained stuck at 4.4 per cent in the quarter to January, although there have been significant problems with collecting data.
Vehicle tax rise for drivers – even if they go electric
While fuel duty may have been frozen again at the Budget, drivers of new petrol, diesel and hybrid vehicles are set to face higher first-year tax rates from April.
In an attempt to drive consumers towards electric vehicles while widening the gap between ‘higher polluting’ vehicles and EVs, the Government will be increasing the first-year Vehicle Excise Duty (VED) for many new cars.
A car’s first-year tax figure is calculated by taking into account the amount of CO2 it produces. At present, electric vehicles don’t incur any VED charges, while cars emitting between 111g and 150g/km pay £220. Those that emit more than 255g/km pay £2,745 for their first year.
However, buyers of electric vehicles are set to pay £10 for their first year’s VED from April, under a change introduced by the previous Tory administration.
EVs will then be subject to the standard rate of £195 for every subsequent year of ownership.
Buyers of electric vehicles are set to pay £10 for their first year’s VED from April, under a change introduced by the previous Tory administration.
In contrast, all other rates of first-year VED are set to rise considerably with rates for petrol, diesel and hybrid vehicles all being increased – with most doubling.
A Treasury spokesperson told Car Dealer Magazine that the change means, from April next year, a new Ford Puma driver can expect a first-year VED rate rise from £220 to £440, while a buyer of a Range Rover could pay as much as £5,490 – up from £2,745 – in that first year of ownership.
An Expensive Car Supplement – which sees buyers of new cars that cost over £40,000 pay an extra £410 a year for the first five years – won’t be extended to electric cars either. However, the government has said that this could be introduced to electric vehicles at a future ‘fiscal event’.
Household bills to surge
The annual energy bill for a household on a variable tariff – as opposed to a fixed deal – using a typical amount of gas and electricity will go up by 6.4 per cent or an average £111 a year to £1,849 from April 1.
Regulator Ofgem said it increased the cap in response to a recent surge in wholesale prices.
The cap is set every three months and limits the amount suppliers can charge for each unit of gas and electricity, but not the total bill, so if you use more, you will pay more.
It affects 22 million homes in England, Wales and Scotland.
Standing charges – daily fixed fees to connect to a gas and electricity supply which vary by region – are rising again for gas but dropping for electricity, but it depends on where you live.
Households in England and Wales will see their water bills increase by an ‘extortionate’ average of £86 next year alone, as firms face accusations of years of under-investment in their crumbling infrastructure.
Regulator Ofwat has allowed companies to raise average bills by £31 a year, or £157 in total, over the next five years to £597 by 2030 to help finance a £104 billion upgrade for the sector.
That represents a 36 per cent increase before inflation, which will be added on top.
However, despite the average £31-a-year rise, households will be hit particularly hard from April with an average increase of £86 or 20 per cent front-loaded into the coming year, with smaller percentage increases in each of the next four years.
Stamp duty
From April 1, stamp duty will become more expensive for some home-buyers. Under the changes, the current ‘nil rate’ band for first-time buyers will reduce from £425,000 to £300,000, while other home-buyers will also see a reduction from £250,000 to £125,000. Stamp duty applies in England and Northern Ireland.
Property website Rightmove has estimated that a total of nearly 74,000 home-movers in England will just miss the March 31 deadline to get the bigger stamp duty discounts and complete in April.
Home-movers just missing the deadline and completing in April rather than by March 31 will pay a combined £142 million more in stamp duty payments than they would have paid if they had completed their home purchase before the deadline, the website has calculated.
Santander UK recently said it recorded a 130 per cent increase in mortgage applications in the fourth quarter of 2024 compared with the same period a year earlier, as some home-buyers sought to potentially save themselves thousands of pounds in stamp duty costs.
In the South East of England, where the average house price is £385,600, first-time buyers could potentially save up to £4,280 in stamp duty by purchasing before April 1, based on typical property values, Santander said.
In London, an average first-time buyer could end up paying more than £11,000 extra from April, it calculated. Based on an average house price of £535,700, Santander calculated that a first-time buyer faces paying £5,535 currently, compared with £16,785 from April.
IHT stealth tax increase
Frozen income tax thresholds could mean that some people get pushed into higher tax brackets as and when they get a pay rise.
More people could also be pushed into paying tax on their savings, by breaching the personal savings allowance, which is £1,000 for basic rate taxpayers.
