As the UK government implements new policies, several significant changes will affect how people manage their finances. From shifts in benefit systems to updates in bank fees, energy prices, and tax deadlines, staying informed is crucial for effective financial planning. Here’s a detailed look at what’s coming and how it might impact you.
Benefit System Overhaul
Starting in June 2024, recipients of old-style benefits like income-related Child Tax Credits and Employment Support Allowance will begin transitioning to Universal Credit. This transition will occur over three months to streamline the benefits system, merging multiple benefits into one.
- Potential Impact:
- About 55% of recipients might see an increase in their payments.
- Approximately 900,000 people could receive less money.
- Timeline:
- The transition should be complete by March 2025, with some groups transitioning by 2028.
Energy Price Cap Reduction
From July 1, 2024, the energy price cap, which limits the maximum amount energy companies can charge, will be reduced. This means the average dual fuel household paying by direct debit will see their annual bill decrease from £1,690 to £1,568—a 7% reduction aimed at providing financial relief from high energy costs.
Bank Fee Increases
Lloyds Bank will increase monthly fees for some of its packaged accounts starting in July:
- Club Lloyds Silver Account: Fees will increase from £10 to £11.50 per month.
- Club Lloyds Platinum Account: Fees will rise from £21 to £22.50 per month.
- Club Lloyds Account: The basic fee remains £3, waived if you deposit £2,000 or more monthly.
Evaluating Value
Customers must decide if these accounts still offer good value. Some may find the benefits worth the increased cost, while others might look for more affordable options.
Inflation and Interest Rates
The Office for National Statistics will announce the latest inflation data on July 17, 2024. Inflation measures the change in prices for goods and services over the past year. Recently, inflation hit the Bank of England’s target of 2%, down from a high of 11.1% in October 2022. This stabilization could affect consumer confidence and economic policies.
- Bank of England’s Response:
- If inflation remains around 2%, the Bank may lower interest rates, making borrowing cheaper and stimulating economic activity.
Credit Card Payment Changes
Starting July 22, 2024, Barclaycard will reduce the minimum monthly payments required from cardholders. The new minimum payments will be the highest of:
- 1% of the balance
- 1% of the balance plus interest
- £5
Long-term Implications
While lower payments can reduce immediate financial stress, they may lead to longer repayment periods and higher interest costs. For example, a £1,000 balance that previously took around nine years and eight months to clear with £699 in interest could now take 19 years and three months with £1,655 in interest.
Policy Changes
The government is considering changes to Personal Independence Payment (PIP), potentially moving from regular payments to vouchers or altering payment methods. The public consultation on these changes will close on July 23, 2024. This is the final opportunity for individuals to provide input, which will influence the final decision.
Tax Deadlines
- Self-assessment taxpayers: Must make advance payments toward their yearly bill by July 31. This mainly affects self-employed individuals and those with untaxed income.
- Tax credits: Recipients must renew their claim by the end of July to ensure eligibility and accurate information. Failure to renew could result in termination of benefits, impacting financial circumstances.
Staying Informed
These upcoming changes highlight the importance of staying informed and planning ahead. Regularly visit our website to stay updated on these developments and optimize your financial health.
FAQs
Who is transitioning to Universal Credit?
Recipients of old-style benefits like income-related Child Tax Credits and Employment Support Allowance.
When will the energy price cap change?
From July 1, 2024.
What are the new fees for Lloyds Bank accounts?
Club Lloyds Silver: £11.50/month, Club Lloyds Platinum: £22.50/month.
How will Barclaycard’s minimum payments change?
Minimum payments will be the highest of 1% of the balance, 1% of the balance plus interest, or £5.
What is the deadline for self-assessment taxpayers?
July 31, 2024.
