FIVE IMPORTANT ADJUSTMENTS YOU MIGHT NEED TO MAKE TO YOUR BUDGET IN APRIL
Released On 25th Apr 2024
A detailed household budget is the cornerstone of good financial planning. It allows you to track all your income and spending to ensure that you can cover your expenses and contribute to savings and investments for the future.
However, people often make the mistake of creating a budget and then leaving it without making regular adjustments. This could cause potential issues if certain bills increase, if your earnings increase, or certain tax rules change.
If you don’t account for these differences in your budget, you might overspend without realising, making it harder to achieve your long-term goals. Conversely, you might fail to take advantage of any surplus cash you have available.
That’s why it may be sensible to review your budget every few months. This is especially true right now as there are several bills and tax rules that are likely to change in April.
Here are five important adjustments you may need to make to your budget from April 2024.
1. Your Council Tax has likely increased
Councils in England and Wales are permitted to increase Council Tax by a maximum of 4.99% each year unless they have special permission for a bigger rise.
According to Sky News, as many councils face serious financial issues, the majority of them increased Council Tax by the maximum allowed. Additionally, Birmingham City Council and Slough Council have been given special dispensation to exceed the maximum and Birmingham opted for a 9.99% increase.
In fact, only eight councils chose to increase bills by less than the maximum, though not by much.
As a result, your Council Tax bill will likely be higher from April onwards and you may need to account for this in your budget.
2. Another National Insurance cut comes into effect
A second National Insurance (NI) cut was one of the most welcome announcements in the 2024 Spring Budget.
The 2% cut to Class 1 NI contributions (NICs) came into effect on 6 April 2024, so you may notice a slight increase in your earnings if you are employed.
According to the Guardian, somebody earning £50,000 a year will be £748.60 a year better off. Additionally, the chancellor announced a 3% cut to Class 2 NICs for self-employed people. So, the average self-employed person earning £28,000 a year will save around £650 because of this change.
These extra funds could help you cover part of the cost of rising bills, or you could contribute them to savings and investments, so make sure to include them in your calculations.
3. Broadband, phone, and TV providers may have raised their prices
Many broadband, phone, and TV providers raised their prices from April 2024 onwards and these increases may affect you, even if you are mid-contract.
For example, MoneySavingExpert reports:
- BT and EE raised their broadband prices by 7.9%
- O2 increased its phone contract prices by 8.8%
- Sky increased the cost of its packages by an average of 6.7%.
These price hikes come on top of existing price increases last year, so the cost of these services could be significantly higher than what you were paying a few years ago.
While your bill may only change by a small amount, you could see the price of numerous internet, phone, and TV services slowly creeping up over the years. These costs quickly add up and could eat into your budget if you don’t plan for them.
You might want to compare providers and consider switching certain services to find the best price too.
4. You might pay less for energy
You’ve likely seen your energy costs increase significantly over the last few years. Fortunately, as wholesale prices start falling, the Ofgem energy price cap – the maximum amount that energy providers can charge for each unit of energy and a standing charge – is coming down.
The regulator, Ofgem, reviews the price cap every three months and the latest cap came into effect on 1 April 2024.
According to Ofgem, the average household using electricity and gas and paying by direct debit will save £258 a year as the energy price cap has fallen by around 12%.
Bear in mind that the price cap limits the cost of each unit of energy, not the total bill itself, so your bill may not fall by this much, depending on your usage.
Still, the new price cap means you may not need to budget as much for energy costs in the coming months. Additionally, the cap is predicted to fall again in June 2024 so your bills could reduce further.
5. The High Income Child Benefit Charge rules are changing
The High Income Child Benefit Charge could reduce the amount of Child Benefit you are entitled to if you earn over a certain amount.
Previously, if you or your partner had an adjusted income – your total taxable income before any deductions – of £50,000 or more, you would trigger the High Income Child Benefit Charge.
The charge was equal to 1% of your Child Benefit for each £100 you exceeded the threshold. As a result, if you earned £60,000, you would effectively lose all your Child Benefit. You could claim the money and then pay the tax charge through self-assessment, or choose not to receive the payments at all.
Fortunately, on 6 April 2024, the rules changed and the threshold at which you trigger the charge increased to £60,000. Additionally, the charge now equals to 1% for every £200 that you exceed the threshold.
As a result, if you are affected by the High Income Child Benefit Charge, you may retain more of your benefits in the future.
