Five big money changes in January including energy bill rise and tax cuts for millions – what they mean for you
FIVE major money changes are coming in January that could impact your pocket.
The start of the year is the perfect opportunity to get your finances in order, particularly after an expensive festive period.
And there are several changes this month which could affect your budget.
From expanded childcare, to energy bill rises and tax return deadlines, here’s everything you need to know.
Energy bill rise
Energy bills have risen for millions of households this month after Ofgem’s new price cap came into effect.
The regulator introduced the new cap on January 1 meaning the average household on a dual-fuel tariff and paying by direct debit is now forking out £94 more a year, from £1,834 a year to £1,928 a year.
The price of electricity has risen from 27.35p per kWh to 28.62p per kWh while the unit rate for gas has increased from 6.89p per kWh to 7.42p per kWh.
Of course, the amount you pay for your bills may be less or more than the £94 figure as the cap is just a limit on what suppliers can charge you per unit of electricity and gas.
Meanwhile, the exact unit rates and standing charges you pay vary slightly based on your supplier, where you live and how you pay for your energy.
Prepayment meter customers, for example, will pay slightly less than those paying via direct debit.
Consumer website MoneySavingExpert.com has a useful calculator which lets you work out what you will pay annually under the January price cap.
Tax return deadline
Self-assessment customers have until January 31 to file their online tax return for the 2022/23 tax year or risk being fined.
The deadline for filing paper form tax returns was October 31 last year, but thousands can still file online.
But you face a £100 penalty if you are up to three months late, after January 31.
You are then fined a further £10 a day after three months, up to a maximum of £900.
Either way, there’s a calculator on the Government’s website you can use to figure out how much you’ll have to pay in fines if you file late.
Winter fuel payment (automatic payments)
The winter fuel payment is made to millions of elderly households and is worth up to £600 this winter.
The vast majority of payments are made automatically, and should have landed in bank accounts between November and December.
But all automatic payments should have been made by January 26.
If you haven’t received the payment by this date, you should get in touch with the Winter Fuel Payment Centre on 0800 731 0160.
Anyone who needs to claim the winter fuel payment has to do so by March 31.
If you have not received a winter fuel payment before, you only need to claim if any of the following apply:
- You do not get benefits or the State Pension
- The only benefit you get is Adult Disability Payment from the Scottish Government, Housing Benefit, Council Tax Reduction, Child Benefit or Universal Credit
- You live in Switzerland or an EEA country
If you have had a winter fuel payment before, you only need to claim if since your last payment you have either:
- Deferred your State Pension
- Moved to Switzerland or an EEA country
If you do need to claim you can do so by phone or by post.
Changes to free childcare
Parents can apply for extra free childcare hours from January 2 after a major change was announced by the Government.
Working mums and dads of two-year-olds are in line for 15 free hours a week from April, but are being encouraged to apply from now.
You are classed as a working parent if you individually earn more than £8,670 but less than £100,000 adjusted net income per year.
For couples, the rules apply to both parents, so both must earn at least £8,670 and neither can earn more than £100,000.
There’s more details on the exact criteria on the Childcare Choices website and how to apply.
Tax cuts for millions
Class 1 NICs will be cut from January 6 from 12% to 10%, impacting roughly 27million workers.
The change means someone earning an average salary of £35,000 will save over £450 a year.
And depending on your role and income you could take home up to £600 more a year, according to the Treasury.
For example, the average full-time nurse on £38,900 will receive an annual boost of over £520 from January 6.
Meanwhile, a police officer on £44,300 will receive over £630 more.
Self-employed workers are also set to get an income boost of up to £350 after some NIC rates were cut too.
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