The new year is here – and it brings with it a raft of changes that will impact your pocket or pay packet. Here are the big changes to look out for in 2023.

JANUARY: Old stamps expire

Anyone with non-barcoded stamps will find they are officially not usable from 31 January. However, the Royal Mail has introduced a six-month grace period, which means you can still use them until 31 July. It means you either need to use up the stamps or swap them for new ones. Anything posted with an old stamp after the grace period will be treated as though it has insufficient postage.

MARCH: Rail fares rise

Usually rail fares rise in January, but the Government delayed the increase to 5 March this year. However, fares will then rise by 5.9%, a whopping amount compared to recent history. The price increase, which was announced by the Government just before Christmas, applies to half of all tickets, including season tickets. Other fares that are not regulated could rise by more.

APRIL: Income tax threshold lowered

The point at which people pay the highest rate of income tax (45%) will be reduced from the new tax year, from £150,000 to £125,140. The move means that someone earning £150,000 a year will pay almost £1,250 a year extra in tax.

On top of this move the basic and higher rates of income tax are frozen again – meaning taxpayers will see a higher tax bill than if the thresholds had risen in line with inflation as they usually do. It means that anyone who gets a pay rise could be hit with a higher tax rate, as well as potentially losing certain allowances, such as child benefit or their personal allowance.

APRIL: Tax-free allowances slashed

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.

APRIL: Council tax will rise

The Government has changed the rules for local councils, meaning they can increase council tax by up to 5% without seeking a referendum. It means that many people will see council tax bill increases up to this limit, as many local authorities are struggling with funding. If rates increase by 5% it means the average Band D property in the UK will pay £2,064 a year for council tax – an increase of almost £100 on 2022’s bills.

APRIL: State pension increases (and other benefits)

Anyone on the state pension will see a 10.1% increase to their payouts from April. As a result, the full flat-rate state pension will rise to over £10,000 a year for the first time, while the basic state pension, paid to those who reached state pension age before 6 April 2016, will increase to over £8,000 a year.

On top of this, other benefits will increase by the same amount, including Universal Credit and child benefit.

APRIL: 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.

SPRING: New cost of living payments begin

As with 2022, certain people will get handouts to help with the cost of living, with the first payments coming from Spring. Those on certain means-tested benefits, including Universal Credit and pension credit, will get £301 in the spring, another £300 in the autumn and then a final £299 in spring 2024.

Those on disability benefits will get a £150 handout this summer, while pensioners will get an additional £300 in their Winter Fuel payments this year (or in early 2024). The exact payment windows will be revealed closer to the time, including the eligibility periods for them.

‹ Previous2023-01-12Next ›