It’s not all bad news. Several things are happening in April that are good for people’s finances. Here are four of them:
The latest national insurance cut
A multibillion-pound tax cut is about to kick in: the main rate of national insurance contributions (NICs) paid by employees will fall from 10% to 8% with effect from 6 April. The government says this will benefit 27m working people, and it follows a cut from 12% to 10% that took effect in January.
The Treasury says the average worker on £35,400 will save more than £900 a year as a result of the cuts in January and April. It says a teacher on £44,300 will gain more than £1,250 a year.
Looking at just the latest cut, for those earning £20,000 from employment, it is worth £148.60 a year, and for those earning £50,000 it is worth £748.60.
Also on 6 April, the government will reduce the main self-employed NICs rate from 9% to 6%. This is a bigger reduction than originally planned. It will also abolish class 2 self-employed NICs.
Big changes to the ‘tax on children’
The high-income child benefit charge is the government’s way of reducing the amount of child benefit paid to higher-earning parents.
For years, child benefit paid to those on more than £50,000 a year has been clawed back via the tax system. But from 6 April, this threshold is being upped to £60,000. Also, the rate at which the penalty is charged will be halved, so people will lose all their child benefit only once they earn £80,000. At the moment it’s £60,000.
The changes mean nearly 500,000 families will be better off by an average of £1,260 in 2024-25, while 170,000 families will be removed from the tax bracket, the government says.
More freedom and choice for Isa investors
Every tax year, savers can put money into one of each kind of Isa – the main two are the cash Isa, and the stocks and shares Isa. You can save up to £20,000 in one type of account, or split the allowance across some or all of the other types.
But from 6 April, people will be able to sign up to several Isas of the same type every year, provided the overall maximum Isa allowance isn’t breached.
It means cash Isa savers “can jump on better rates later in the tax year”, and people will no longer run the risk of accidentally opening two of the same kind and breaking the rules, says Sarah Coles at investment firm Hargreaves Lansdown.
Free childcare will start rolling out
In 2023, the government announced a major extension of childcare support in England. The first phase of this scheme is being rolled out from April, when eligible working parents of two-year-olds will be entitled to 15 hours of childcare a week, typically for 38 weeks a year.
“Childcare providers might stretch the hours for up to 52 weeks, [but] this means you’ll get less than 15 hours a week,” says Citizens Advice.
Many commentators say there are a lot of challenges ahead in terms of getting this scheme fully up and running.
