10 key financial changes in 2024: National Insurance, energy bills, pension changes and more

A look at the good, the bad and the ugly money changes affecting your cash in 2024.

The new year brings with it a number of big financial changes that could dent your wallet or boost your income.

Here’s what you need to know and what you can do to grab any extra cash or benefits and avoid any new traps.

1. State Pension to increase

Retirees are in for another big increase to their State Pension payments next year, thanks to the triple lock.

Those on the New State Pension will see their income move from £203.85 to £221.20. As a result, annual incomes will move from around £10,600 to £11,502.

Those on the old Basic State Pension will see their weekly pension payments jump from £156.20 to £169.50, meaning their annual pay will move from around £8,122 to £8,814 from April.

2. Council Tax increases

Councils look set to hike Council Tax rates significantly once more in 2024.

Most councils increased Council Tax by the maximum allowed this year, and given the financial pressures faced by councils across the country it’s fair to assume that similar hikes will be made this coming year. 

That will mean many of us will have to pay far more from when the new rates kick in from April.

See if you could cut your Council Tax bill

3. Energy price cap changes

Energy bills are, understandably, a big source of worry for many at the moment.

The energy price cap has thankfully dropped to a level below that of the Government’s energy price guarantee, meaning that annual bills for typical households are around £500 a year less than they were last year.

However, the new price cap kicks in from the start of January, and will see our bills increase by a typical £94 to £1,928.

What’s more, there isn’t the Government support in place which we had last year, like the Energy Bill Support Scheme where the Government paid £400 towards our bills during the winter months.

So while bills appear more affordable than they once were, in practice there may be little tangible improvement.


Get the best price on a new boiler

A new boiler could help you save £100s every year on your energy bills. Boiler Guide can help you find a great deal by letting you compare quotes from local engineers. It only takes a minute!

Get your free quotes now

4. Universal Credit and other benefits to rise

It’s not just the State Pension that is increasing with the start of the new tax year, but a host of other benefits too.

These benefits grow each year in line with the consumer price index measurement of inflation for September, which was registered as 6.7%.

That means a pretty substantial increase for recipients.

For example, the standard Universal Credit allowance for the under 25s will move from £292.11 a week to £311.68, while for those over 25 it will move from £368.74 to £393.45.

Other benefits will also increase at this point.

For example, the higher rate of attendance allowance will move from £101.75 per week to £108.55, while the standard minimum for pension credit will move from £201.05 to £218.15.

5. Increase to National Living Wage and National Minimum Wage

Both the National Living Wage and the National Minimum Wage are due to rise in 2024.

The rate you get depends on your age and whether you’re an apprentice or full employee.

The highest rate is paid to those aged 21 and over, and will move from £9.50 an hour to £11.44 from April 2024.

6. National Insurance changes

The big news from the Autumn Statement was the changes being made to our National Insurance.

For employed workers, the rate of Class 1 National Insurance is being reduced from 12% to 10%, and that change is coming into effect from January. For a worker on the average salary, that cut will be worth around £450 a year. 

The Chancellor is also reforming National Insurance for the self-employed so that from the start of the new tax year Class 4 National Insurance contributions are falling from 9% to 8%, while Class 2 contributions are being removed entirely.

For typical self-employed workers, that’s a saving of around £350 a year.

7. Base Rate falls on the horizon

The stubbornly high rate of inflation has been the big driver in the significant increases to Bank Base Rate over the last year or so.

But with inflation now falling, the Bank of England has opted to freeze Base Rate at its current level for a couple of months in a row.

If inflation continues to drop, then there may come a point when the Bank opts to start cutting Base Rate instead.

While Andrew Bailey, the Governor, has been quick to dampen down such chatter, the financial markets are already starting to price in a cut at some point in the latter half of 2024.

Just that expectation is already feeding into lower interest rates on both savings accounts and mortgage deals.

8. Water bill discounts

We don’t yet know precisely what our water bills will be, once the new levels kick in from the start of April.

However, we do know that a host of suppliers are being forced to hand discounts to their customers after they failed to meet targets on things like pollution and water supply interruptions.

For example, Thames Water is having to give customers discounts worth a total of more than £70m, while Southern Water is paying back £21.5m.

As we get closer to April we will get a better idea of what difference these discounts make to the likely increases to our water bills.

9. ISA changes

The importance of ISAs has been emphasised by the recent increases in savings interest rates, since far greater numbers of savers face the prospect of having to pay tax on their returns.

Using ISAs is a way of avoiding that, allowing you to keep every single penny of returns.

Importantly, ISAs are becoming more accessible in the year ahead too.

From the start of the new tax year, you will be able to open and contribute towards multiple ISAs of the same type during the same tax year. That’s not something that was previously possible, meaning savers and pick and mix both easy access and fixed rates.

10. Reduced allowances for certain taxes

From April, our Dividend and Capital Gains Tax allowances will be dropping once more.

The Dividend Allowance covers how much money you can make from the dividends paid by investments each year, before you start paying tax.

It is being halved from £1,000 to £500, having stood at £2,000 last year.

The Capital Gains Tax Allowance meanwhile is dropping from £6,000 to £3,000, having been cut from £12,300 earlier this year.


Be the first to comment

Do you want to comment on this article? You need to be signed in for this feature

Copyright © lovemoney.com All rights reserved.