Cost of living: what is going up from 1 April?
Businesses and households are braced for a hike in the cost of living from 1 April as energy bills rise, and there are increases in VAT, business rates and the cost of labour.
There is concern that some the prices will dent economic growth, while some businesses may fail and households will be saddled with rising debt.
A survey due out on Friday will show that a majority of firms expect their prices to rise in the next three months as inflation soars.
Energy websites crashed after experts encouraged people to submit meter readings so their usage is covered by the cheaper rates applying before Friday’s hike.
So what price hikes can we expect?
Energy price cap
The energy price cap, which limits how much energy suppliers are allowed to charge, will rise by an average 54%, and 22 million households will see their bills soar. A typical household’s energy bills will cost nearly £700 a year more.
The rate of VAT has been reduced to 12.5% for the tourism and hospitality sector since July 2020 to help it recover from the impact of the Covid pandemic.
It will return to the standard rate of 20%.
Business rates for retailers as well as hospitality and leisure premises in Scotland are being reinstated.
Firms in these sectors with slightly larger premises will also become liable again for the Higher Property Rate, a tax which applies to almost 3,000 retail premises in Scotland and which will see affected properties pay a higher tax rate than their competitors or counterparts in England.
The headline/basic rate poundage in Scotland will rise to 49.8p in the pound, its joint highest level since the advent of devolution in 1999.
Over 12,000 commercial premises across all sectors are subject to the Higher Property Rate surtax and are set to pay 52.4p in the £. A quarter of these premises are retailers.
National Living Wage
The annual rise in national pay rates will see the main rate for adults rise to £9.50 an hour.
These rates are for the National Living Wage (for those aged 23 and over) and the National Minimum Wage (for those of at least school leaving age). The rates change on 1 April every year.
Vehicle Excise Duty
Vehicle Excise Duty, known as road tax, will increase in line with the Retail Price Index measure of inflation.
For cars that emit no CO2, prices will remain at zero. If your car emits between one and 50kg of CO2 per km then standard rate will increase from £155 to £165.
The Driver and Vehicle Licensing Agency (DVLA) keeps checks on car tax paid in the UK. If an untaxed vehicle is not declared SORN then the owner will receive a £80 fine.
Plastic packaging tax
A “plastic packaging tax” charging manufacturers and importers £200 per tonne on packaging made of less than 30% of recycled plastic will be introduced.
It was first announced as part of Rishi Sunak’s Budget in March 2020.
The government defined plastic packaging as “packaging that is predominantly plastic by weight”.
The government says the new tax aims to “provide a clear economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging”.
Red diesel and rebated biofuels will become illegal to help the UK meet its 2050 climate commitments.
The body representing Scottish SME resource and waste management operators says recycling services across the country are under threat following the UK Government’s refusal to exempt the sector from today’s cutting of the Red Diesel exemption.
The comments follow an exchange between Resource Management Association Scotland (RMAS) and the Scotland Office about the impact of the ban on recycling and waste operators.
RMAS claims the ending of the Red Diesel exemption, combined with a further rise in the oil price due to the Russian invasion of Ukraine, will drive up operating costs by more than 15% for its member companies which are facing additional fuel expenses of up to £400,000 per year.
There are a number of other changes taking effect from 1 April, including small company book-keeping rules and changes to Scotland’s railways.
Making Tax Digital
Making Tax Digital will require all eligible businesses to keep all VAT records in a digital format.
A recent study from Intuit QuickBooks found that awareness and uptake of the new legislation remains low, as small business owners are still not confident about making the switch.
The study found that 82% of businesses who need to comply with MTD are still unaware of the impending deadline. Less than a third (29%) know what they need to do to become compliant and are confident of meeting the deadline.
However, failure to comply with the legislation will lead to penalties on a first completed VAT return, on or after the deadline.
Dutch firm Abellio’s ScotRail franchise is being terminated early and a Scottish Government ‘arms-length’ company, ScotRail Trains Limited, takes over. The only change will be the removal of the Abellio branding.
All staff will be transferred over to the new organisation.
All tickets bought in advance, as well as season tickets, will remain valid and there is no need to update personal details online to get compensation for late and cancelled trains.
There are currently no plans to change the timetables. All schedules will remain as planned.
The RMT union will hold a day of action outside Glasgow Queen Street station calling for “a properly funded rail operator that delivers for passengers, communities and workers”.