Average annual bills are forecast to rise to £4,200 from January 2023, due to increasing inflation and interest rates. Whilst the news of increasing bills is bleak, the government has already released a few ways that they are helping the nation, and with a new PM announced on Monday, we may well see more help and changes in the coming weeks. Here’s what we know so far.
Energy Bills Discount
The government has announced that every household in England, Scotland and Wales will receive a £400 energy bill discount, paid to consumers over 6 months starting from October 2022. This discount is to help ensure that households have some support over the cold Winter months, and the payment will not need to be repaid.
Households in council tax bands A-D in England will also receive a £150 rebate to help pay for rising bills via their council tax bill.
Support for Those on Benefits
The government will also be sending out a cost of living payment of £650 for those on certain benefits. The payment will be made up of two instalments – one instalment of £326 paid out in July, and the second instalment of £324 in Autumn. The payments will be paid automatically and do not require sign up.
To qualify for this payment, you must receive one of the following benefits:
- Universal Credit
- Income Based Jobseekers Allowance
- Income related Employment and Support Allowance
- Income Support
- Working Tax Credit
- Child Tax Credit
- Pension Credit
Households that receive the Winter Fuel Payment – paid to all homes with at least one person of pension age – will receive an extra £300 in November and December, in the hopes to help with the cost of energy to keep people warm during the winter. Pensioners are disproportionately impacted by higher energy bills and many do not claim the benefits that they are entitled to. This payment is non-taxable and does not affect other benefits, and similar to the above, will be paid directly to those eligible.
Individuals on disability benefits will receive a one-off payment of £150 from September. This includes those on:
- Disability Living allowance
- Personal Independence Payment
- Attendance Allowance
- Scottish Disability Benefits
- Armed Forces Independence Payment
- Constant Attendance Allowance
- War Pension Mobility Supplement
These payments will be exempt from tax, will not count towards the benefit cap, and will not have any impact on existing benefit awards.
There will also be £1 billion of support via the Household Support Fund, running until March 2023. This scheme provides those in need with payments to help with food, utility and clothing.
Self Employed Tax Breaks
From April this year, those that are self-employed are not liable for Class 2 National Insurance contributions on profits between the Small Profits Threshold and Lower Profits Limit. This means that lower-income self-employed workers could see a tax-bill reduction of up to £165 a year.
Universal Credit Taper Rate
The UC Taper Rate will reduce from 63% to 55%, with increasing work allowances by £500. Effectively, this is a tax cut for the lowest paid in the UK. As a result, over 1.5 million households will save an extra £1,000 yearly.
Alcohol duty will be frozen for 2022-23, meaning duty rates on items such as beer, cider, wine and spirits are frozen. As a result, this means that the price of alcohol drops slightly.
Although the government understands that many households are worried about rising prices over the next few months, there is still a lot to be done. We are hoping that the new PM Liz Truss will announce more help in the coming weeks.
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