Everything will change for your finances next year – but not in a good way

A series of financial changes are expected to take effect when Big Ben rings on January 1.

The state pension, hourly wage and council tax will all be revised between January 1 and the new tax year in April.

But as inflation hits record highs, many changes are expected to exceed the cost of living.

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Here we take a look at the month-to-month changes and what they mean to you.


Auto and home insurance

From next month, insurers will be banned from charging existing customers more than new ones under measures to eliminate the so-called loyalty bonus.

Many insurance companies increase prices for existing customers upon renewal while offering lower-cost prices to new customers to attract them.

In summary, this means that your renewal price will not be higher than it would have been if you had joined the same company as a new customer.

Inheritance tax

On January 1, a change in inheritance tax rules will mean there will be less paperwork for thousands of people with no inheritance tax to pay, which is expected to save 230,000 people additional stress each year.

Rail fares could rise nearly 5% this year, signaling bad news for commuters

Rail fares

Train passengers brace for a skyrocketing rail fare hike next year after RPI inflation climbed to 3.8% in July (the month typically used to define the hike) – the highest in more than three year.

Rates typically increase in January based on the Retail Price Index (RPI) measure of inflation for the previous July.

This year, ticket prices in England and Wales have increased on average by around 2.6% in March, representing the RPI for July 2020 plus a percentage point.

If a similar approach were used next year, regulated tariffs could increase by 4.8%.


Tank changes

The tax break introduced during the pandemic for hotel and tourism businesses ends on March 31.

This has helped some businesses keep prices under control despite losing money during closings.

There is a risk that this change will lead to higher prices in pubs and restaurants.


A series of changes will take effect in April at the start of the new tax year, some of which were announced in the October budget.

Minimum wage

Low-paid Britons are set to benefit from an increase in the minimum wage to £ 9.50 an hour from April 1.

Chancellor Rishi sunak announced the increase in the national living wage for those over 23 in its month of October Budget , from the current rate of £ 8.91 per hour to £ 9.50 per hour.

The national minimum wage for 21-22 year olds rises to £ 9.18, for 18-20 year olds £ 6.83.

Those under 18 get £ 4.81 an hour and the apprentice rate is also rising to £ 4.81.

The caregiver gives the retiree a drink
Retirees will see an increase of at least £ 4.26 per week from April

State pension

the state pension will increase to £ 5.50 per week from April 2022, in line with September’s 3.1% inflation rate.

The increase means people on the new state full pension will see their annual income rise to £ 9,628.50, or an additional £ 289.50.

To get the full state pension, you need a minimum of 10 years of “qualifying” work and 35 years of national insurance contributions on your employment record.

Men born on or after 6 April 1951 and women born on or after 6 April 1953 are eligible for the new state pension of £ 179.60 per week, or £ 185.15 per week after the increase .

Those who reached state retirement age before 6 April 2016 receive the old state pension, known as the Basic State Pension, which is currently £ 137.60, or 7 £ 155.20 per year.

A 3.1% increase adds an additional £ 4.26 per week to the payment, bringing it to £ 141.86, or £ 7,377 per year and an additional £ 221.81 over the year.

Rising national insurance rates

Employees, employers and the self-employed will all pay 1.25 pence more in British pounds for National Insurance (NI) from April 2022.

The average worker will pay an additional £ 255 a year in taxes. An employee with a salary of £ 20,000 per year will pay an additional £ 130.

The highest earners with £ 50,000 a year would pay an additional £ 505.

People earning less than £ 9,564 per year, or £ 797 per month, do not have to pay national insurance and will not have to pay the new levy.

However, all other active adults, including those over the statutory retirement age, will have to pay it.

Starting next April, the additional 1.25% will appear on payslips as the higher national insurance tax, but in April 2023 NI will revert to its current rate and the additional tax will be collected as new tax on health and social care.

Row of terraced houses
Housing tax could increase by more than 3% next year

Housing tax rate

Some households could see their municipal tax bills skyrocket to £ 400 over the next five years.

The Office for Budget The liability (OBR) said it expected the total amount of council tax to be a third higher in 2026/27 than in 2019/20.

Last year, the councils were able to increase bills by a whopping 5% – although the actual average rise was 4.4%, taking the average D-Band bill to £ 1,898.

Next year, local authorities will be able to increase bills by a maximum of 3% without having to organize a local referendum, including 1% for social assistance.

That would mean local authorities would increase costs by £ 57 in April – potentially raising the average to £ 1,955.

But the fine print in the budget also warned that the council tax could rise even more than that 3% figure.

The fine print says 3% increases are “assumed” – but warns that final allocations will not be set by the government until a later date.

Energy price cap

The next energy price cap, which is due to take effect in April next year, could rise by a further £ 280, reflecting a 500% increase in wholesale gas prices, the industry has warned.

The price cap limits how much suppliers can charge the most vulnerable customers, but this year it meant companies weren’t able to bill customers in real time as gas prices soared. arrow – sending 28 suppliers under administration.

The next cap will be announced in February and then introduced on April 1.

Professional pensions

The automatic enrollment rules mean that every time we start a new job there is a good chance that we will also start a new pension.

People who change jobs frequently can end up building up a lot of retirement savings.

The problem is, if you have a small pot and the pension company charges a relatively high fixed fee, then over the years the fees will effectively cover the full value of the pension.

A system adjustment on April 6 will help avoid this possibility by prohibiting the charging of lump sum charges on qualifying pension funds with a value of less than £ 100.


Boost in retirement

On June 1, rules come into force where people who are accessing their retirement income for the first time will be offered an appointment with the guidance service, Pension Wise.

It is hoped that this will give people independent support as they consider how best to earn income from their pension.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, explained: “2022 is a year of change, but not in a good way.

“Most of the ongoing financial developments will make us worse by the end of 2022. The tax increases announced around the budget will take effect, along with higher prices for everything from energy bills to rail and pub prices. . prices.

“It’s not all bad news though. Among the price increases are a few more positive changes, including the end of the loyalty penalty for insurance customers, lower water bills and relief. the administrative burden for the families of deceased persons.

“Unfortunately, for most of us, the bad outweighs the good, so we need to plan ahead and prepare for the worst 2022 can throw at us.”

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About Natalee Broderick

Natalee Broderick

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