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January 6, 2022
6 minute read
We’re being warned that UK households face a hit of £1,200 this year as stalling wages and rising tax and energy bills cause a “cost of living catastrophe” in the spring. If you’re a homeowner, here are some of the big ticket issues you need to be aware of and what to do about them.
Start your financial detox this New Year by checking your mortgage deal. As it’s likely to be your biggest financial outgoing, remortgaging to a cheaper deal could make a huge difference.
If you’re one of the UK’s 1.1 million households on a lender’s standard variable rate (SVR), you could see significant savings by remortgaging onto a fixed deal. And while some of the super cheap mortgages we saw last year have disappeared, there are still some excellent mortgage rates available. But don’t hang about, the best mortgage deals could disappear quickly. Just yesterday, Nationwide said it was upping rates on some of its loans by as much as 0.45%, which is triple the 0.15% increase made by the Bank of England in December.
If your fixed deal ends in the next six months, you can start looking for a new mortgage now. A lot of lenders’ offers are valid for six months. And so by locking one in now, you’re protecting yourself in case the best deals disappear.
And even if you’re mid-deal, you may still be able to save by remortgaging. So speak to a fee-free broker about your options. They’ll be able to explain any costs, like early repayment charges, and whether in the face of these charges, a move to another deal would still be result in savings.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Last October the energy price cap set by Ofgem, which limits the price a supplier can charge you per unit of electricity and gas, was hiked to £1,277 per year, up from £1,138 per year. While those on prepayment meters saw an increase from £1,156 per year to £1309.
However, those rises may be dwarfed by the huge increase that’s expected in April after the next review of the price cap. Some experts are predicting it could rise by over 40% to over £1,800 per year.
And bear in mind the name ‘price cap’ can be confusing because it isn’t the maximum anyone will pay. The figures are for the ‘average user’. This means if you use more energy than ‘average’ you will pay more than the price cap amount on your energy bills.
In previous years, the advice to save money on energy bills was to switch onto a fixed deal. But experts are now recommending holding off taking out a new fix because the current deals are so expensive.
So it’s more important than ever to save where you can:
It was announced last year that town halls will be able to put up their council tax by 3% in April, partly to pay for social care. However, for those local authorities that did not use their full ability to increase council tax last year, they will be able to carry this entitlement over to next year. This could lead to a 6% rise, seeing the average Band D council tax bill soar by more than £100 in a year.
In London, Sadiq Khan is under fire for wanting to increase Band D bills by £31.93, which will mean an average London household will pay almost £400 a year for services run by City Hall – up 8.8% on current levels.
Have you worked from home during the pandemic? Then you may be able to apply for a working from home tax rebate worth up to £125 per tax year. It’s designed to cover extra costs incurred when working from home such as bigger energy and internet bills.
To help cover the extra costs, HMRC is allowing you to claim tax relief over the 2020-21 and 2021-2022 tax years online.
If you worked from home during the last tax year but didn’t claim it, you can still do so now as claims can be backdated. This means you may be eligible for up to £250 tax relief.
You can make a claim if you’ve only worked from home for just a day. But not everyone is eligible. There are certain criteria you must fulfil, for example, you must have been told to work from home by your employer. You cannot claim tax relief if you chose to work from home.
There are two ways to get the tax relief:
If you claim yourself, the amount you’ll get depends on the rate of income tax you pay:
Alternatively you can claim tax relief on the exact amount of extra costs you’ve incurred above the weekly amount. However you’ll need evidence such as receipts, bills or contracts.
There’s more information on gov.uk
Your home is likely to be your biggest asset so make sure you look after it by undertaking regular maintenance jobs. This includes checking your roof from the street or the bottom of the garden for slipped tiles after windy weather and inspecting your guttering and drainage points. For a list of jobs you should complete in each season check out our printable Home Maintenance Checklist.
And see where you can add value to your home too. What you can achieve will depend on your budget and how much time you have. Investing in your home could include clearing out the clutter and giving a fresh lick of paint to your walls, to bigger jobs such as a loft extension or building a granny annex to create a much needed home office. Read our guide on How to add value to your home.
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