Struggling families are facing a large increase in their bills from this month with the average person with a mortgage paying an extra £411 a month, a group has calculated. Figures from interactive investor found an average Briton will pay an extra £4,569 over the coming tax year.
Analysts from the group calculated an average person will pay £303 a month more on mortgage repayments will increase £303 a month while also paying £8 more on their council tax and £33 more in income tax.
All households are also set to be hit by a £67 a month increase in energy bills as the instalments from the energy bills discount finished in March.
The average person who rents will see their bills go up by £141 a month, totalling an extra £1,327 to pay over the course of the year.
Britons may face even higher monthly costs as water bills are also increasing and the cost of food is continuing to rise, with the March figure for groceries inflation at 17.5 percent.
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Myron Jobson, senior personal finance analyst at interactive investor, said: “As keeping on top of rising prices remains a daily battle for many, the new tax year personal finance considerations can easily be missed.
“But being in the know of the changes afoot and taking full advantage of all the tax breaks and support available, so that you don’t pay more than you need to, could help bolster your financial resilience for the short and longer term.
“While inflation is forecast to cool significantly in the second half of the year, the surprise increase in inflation in February is a painful reminder that the economic script isn’t always followed.
“As such, hoping for the best and preparing for the worst remains a diligent approach to finances.”
Analysts were predicting inflation to continue to fall after peaking in November last year but it rose from 10.1 percent to 10.4 percent from January to February.
Some 1.5 million households are finishing their fixed rate mortgage deal this year, meaning they will see their repayments significantly increase when they sign up for a new deal.
The £303 average increase figure was based on if a person is looking for a two-year fixed deal for a property worth £200,000 this year, after finishing a similar deal.
Alice Guy, head of Pensions and Savings at interactive investor, encouraged homeowners to shop around for the best deal and not accept the first offer.
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She said: “If you’ve still got a few months to go, you can usually hold onto your mortgage offer for several months before signing on the dotted line.
“Many experts expect mortgage rates to drop slightly later in the year, so you may be able to get a better deal nearer the time.”
The group warned middle earners are set to pay almost £400 more in taxes over the year as the income tax personal allowance has been frozen at £12,570.
Mr Jobson said the threshold being frozen makes it more attractive for savers to pay into their workplace pension through salary sacrifice, which reduces the portion of their income that is hit by income tax.
He explained how the scheme works, saying: “This arrangement allows employers to reduce employees’ salary and pay the equivalent amount as pension contributions.
“Basic-rate taxpayers get 20 percent pension tax relief, turning a £80 contribution to £100. If you are a higher-rate taxpayer, you could reclaim an additional 20 percent tax on your pension contributions, for a total of 40 percent tax relief.
“Think of a pension as deferred income and this seems like a good way to reduce your overall National Insurance bill without reducing your income, if you are happy to take it after age 55 instead.”
State pension payments are increasing by 10.1 percent in the new tax year, with the full basic state pension increasing to £156.20 a week while the full new state pension is going up to £203.85 a week.
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