State pension rises £221 a year but cost of living jumps £3,000 - welcome to ‘awful April’ | Personal Finance | Finance

State pension rises £221 a year but cost of living jumps £3,000 – welcome to ‘awful April’ | Personal Finance | Finance

The Center for Economics and Business Research has predicted that basic household spending will rise by £2,440 as food, fuel and energy prices rocket. On top of this, families face paying an extra £600 in tax and National Insurance hike, lifting the total to more than £3,000.Tax hikes and price rises coming into force this month will place even more pressure on everybody’s wallets.It can be hard to keep up, so to mark April 6, the first day of the new financial year, here are some of the most punishing changes coming your way. Remember, general rises in the price of food, petrol and other basics will come on top of this.State pension increase. From Monday, the state pension increases by 3.1 per cent.Those who retired before April 6, 2016 on the old basic state pension will get a pay rise of £4.25 a week to £141.85. That’s a rise of just £221 a year but many will get even less, depending on their National Insurance contributions. Those who retired after that date on the new State Pension will get £5.55 extra at £185.15. Chancellor Rishi Sunak’s decision to suspend the triple lock this year will cost pensioners dear. The state pension will fall in real terms, with inflation expected to peak at 8.7 percent later this year.National Insurance hike. The new National Insurance 1.25 percent increase comes into force today, although Sunak will soften the blow by increasing the threshold at which workers start paying to £12,570 from July 6, 2022.Currently, pensioners do not pay NI, but that will change from April next year they will pay the 1.25 percent levy on earnings. Income tax freeze. In his Budget last year, Sunak froze income tax thresholds until 2025/26. This will steadily drag more people into the HMRC’s tax net, as incomes rise but personal allowances stay the same.READ MORE: Pension can be used to combat inflation and slash income taxA £30,000 earner would have paid £3,486 in income tax in the 2021 /22 tax year, but if they get a 4 percent pay rise they will pay £3,726 this year. That’s an extra £240 straight to HMRC.Inheritance tax bands frozen. Sunak froze the inheritance tax nil-rate threshold at £325,000 for five years. It’s now been held at this level since 2009, dragging more families into the tax net every year as house prices and share valuesThe Chancellor also froze the nil-rate residence band at £175,000 until 2025/26. This applies to families passing on their main home to direct descendants such as children and grandchildren.Sunak froze the capital gains tax allowance at £12,300 and the pensions lifetime allowance at £1,073,100, both for five years.DON’T MISS:Now tax- mad Sunak ‘fines’ Brits 55% for saving in pension [WARNING]State pension to top £10,000 for first time – millions feel cheated [REVEAL]Brits eat into their savings as financial squeeze bites [GUIDE]Council tax bills jump. The typical property in England’s Band D council tax band in England climbed by 3.5 percent to £1,966 from April 1. That’s a jump of £67 from £1,898 last year, official figures show. The Government’s £150 council tax rebate offers partial relief. Energy cap rockets. Last Friday, the energy bill cap jumped 54 percent to £1,971, costing the average household an extra £693 a year. Worse is to come, with the cap expected to hit £3,000 from October 1.Water bill torture. Water bills will rise by an average of 1.7 percent in England and Wales from April, according to Water UK, pushing the typical annual bill by around £7 to £419 a year. Mobile and broadband hike. Millions of phone customers with BT, EE and Vodafone will see their bills rise from April, as will many broadband customers.National Living Wage up. Workers on the National Living Wage will feel better treated as this rose to £9.50 on April 1, up 59p an hour. That is an increase of 6.6 percent.