Be on the lookout for these significant developments to personal finance in the first half of 2023
There are some significant changes for 2023 and these are listed below.
January:
Expiration of stamps
This one sneaked in. Beginning on January 31, anyone possessing non-barcoded stamps will discover they are ineligible for use. You may still use them, though, until July 31 because to a six-month grace period instituted by the Royal Mail. It implies that you must either use up the stamps or exchange them for fresh ones. After the grace period, everything sent out with an outdated stamp will be deemed to have inadequate postage.
March:
Train tickets
Normally, rail rates increase in January, but this year the government postponed the hike until March 5 due the current pressures. However, subsequent ticket increases will be enormous relative to past trends, totalling 5.9%. The government announced a price rise soon before Christmas that affects half of all tickets, including season passes. There is a chance that unregulated fares will increase much higher!!
April:
Reduced income tax threshold
With the start of the new tax year, the threshold at which individuals pay the highest rate of income tax (45%) will drop from ￡150,000 to ￡125,140. A person making ￡150,000 per year would now have to pay over ￡1,250 more in taxes annually as a result of the change.
Additionally, the basic and higher rates of income tax have been frozen once more, which means that people will pay more in taxes than they would have if the thresholds had increased as normal in line with inflation. It implies that everyone who receives a wage raise may face a higher tax rate in addition to the possibility of losing certain benefits, such as child benefit or personal allowance.
Reduced tax-free allowances
The new tax year will also bring a tax crackdown on investors, as the tax-free amounts for capital gains and dividends will be cut. It means the amount of dividend income you can receive before paying tax will be reduced from ￡2,000 to ￡1,000, costing a higher-rate taxpayer up to ￡338 more in tax. Meanwhile, the tax-free amount for capital gains will be chopped from ￡12,300 to ￡6,000, costing a higher rate taxpayer up to ￡1,260 a year more for non-property gains.
Ahead of the deadline it’s a good idea to move money into an ISA (or pension) if you have sufficient ISA allowance remaining. Alternatively, you could transfer assets to your spouse to use their allowances.
Council tax is going up.
Local councils may now hike council tax by up to 5% without calling a referendum thanks to changes made by the government. The fact that many local councils are having financial difficulties means that many people may experience rises in their council tax bills up to this cap. The average Band D house in the UK will pay ￡2,064 in council tax year if rates rise by 5%; this is an increase of approximately ￡100 over 2022's costs.
领英推荐
Energy bills will?rise, again
The current iteration of the Government’s Energy Price Guarantee ends in April. It will be continued but the cap will be placed at a higher level, meaning that the average household energy bill for electricity and gas will rise from ￡2,500 a year up to ￡3,000 a year – although in reality lots of people will pay far more if their energy use is above average.
On top of this, the Government hasn’t said if it will be providing the universal ￡400 off energy bills that it handed out to every household in 2022 and if it is repeating the ￡150 council tax rebate. This means that the average household could face an extra ￡1,050 a year in energy costs from April.
Now, some April good news…
Increases in state pension (and other benefits)
Starting in April, everyone receiving a state pension will get payments that are 10.1% higher. As a result, the basic state pension, provided to people who reached state pension age before to April 6, 2016, would grow to more than ￡8,000 per year, and the full flat-rate state pension will climb to over ￡10,000 per year for the first time.
Additionally, the child benefit and universal credit will also increase by the same amount.
Quarter 2 of 2023:
New cost of living adjustments start
Similar to 2022, some individuals will get handouts to help with living expenses, with the first payments starting in the spring. Those receiving some means-tested benefits, such as Pension Credit and Universal Credit, will get ￡301.00 in the spring, ￡300.00 in autumn, and then ￡299.00 in the spring of 2024.
This summer, recipients of incapacity benefits will receive a ￡150.00 handout, while pensioners will receive an extra ￡300.00 in their winter fuel payments (or in early 2024). Closer to the time, the precise payment windows and their associated qualifying periods will be disclosed.
Overall, there are some positives to look forward to for some and some not so positive, but it is a journey we are all going on together, and it will get better.
Hope that helps
Nathan
07773814684