With the rollercoaster of a year that was 2020, many households are now looking towards how best to navigate what lies ahead in 2021, as the current pandemic looks set to continue its devastation on the economy for the first quarter at least.
Experts are in agreement that a solid household budget is a perfect starting block for producing a robust financial plan to see you through any volatility in the economy ahead. Setting savings as a percentage of your income can help put a realistic figure in place that is easier to stick to as you experience any future fluctuations in your income. This can help mitigate some of the changes you can expect in 2021.
Changes to the Energy Price Cap
The default tariff price cap on energy supply is historically revised every six months. Whilst it is there to protect consumers against overcharging, the current cap ends on 31 March 2021, after which time it is largely expected to increase, in turn inflating the price you may pay for your current energy supply. Changing suppliers to take advantage of a cheaper deal elsewhere can help reduce your exposure to an increase in price.
Changes to Council Tax
Increase to council tax is usually capped at 2% in any one year, however, a recent announcement by Rishi Sunak has paved the way for a hike in taxes by as much as 5% in the coming year. This in turn will affect the monthly expenditure for many households.
Changes to Other Taxes
There has been quite a bit of discussion about possible changes to capital gains tax and inheritance tax as the government looks for ways to help the economy recover. These changes, as well as any proposed changes to income tax, VAT, and national insurance will take place in April, however, some planning now can help you take advantage of current allowances so you are in a good position to ride the storm come April.