6 money changes in January including National Insurance cut and energy bill rise
The New Year has officially begun - and January brings with it a whole host of money changes that can affect your wallet.
Energy prices are rising again today and there are new rules being introduced for people with side hustles, while working parents will be given a boost as applications open for free childcare. Then later in the month, National Insurance contributions will be cut - although the threshold for when you start paying remains frozen.
We'll also have the latest inflation figure later in the month, where we'll see if it continues to fall, and the filing deadline for self-assessment taxpayers is fast approaching. Here are all the significant money changes for the next few weeks.
1. Ofgem price cap rises - January 1
The Ofgem price cap has risen from £1,834 a year to £1,928 - pushing up energy bills by around 5%. This is for a typical dual fuel household paying by direct debit and will remain in place until March 31.
But despite what its name suggests, the price cap is not a total limit on how much you can pay for energy. Instead, it sets the unit rates for gas and electricity, as well as the standing charges.
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This means your actual bill can be more or less than the price cap, depending on how much energy you use. The price cap figure is used to illustrate what someone with average energy use can expect to pay.
2. New tax rules for side hustles - January 1
HMRC has begun instructing online platforms to record how much money people are making, as part of a crackdown on tax avoiders. This includes popular sites such as eBay, Vinted, Etsy, Uber, Deliveroo, Fiverr, AirBnb and TaskRabbit.
You can earn £1,000 in additional income each tax year alongside your regular job - this is known as your Trading Allowance. If you make more than this, then you need to report it to HMRC through self-assessment and you’ll need to pay tax.
3. Applications open for free childcare - January 2
Working parents of two-year-olds in England will be able to get 15 hours a week free childcare from April 2024. The applications for this open on January 2.
Free childcare rules will be expanded again in September 2024 to include the parents of children aged nine months to 23 months, who will also be able to apply for 15 hours a week. This will be increased to 30 hours of funded childcare from September 2025 for working parents of nine months to the start of school.
At the moment, only parents of three and four-year-olds can claim 15 hours a week of free childcare, while some can get 30 hours a week.
4. National Insurance cut - January 6
National Insurance is being cut this month, meaning millions of workers will pay less tax. If you're an employee, you currently pay 12% of your income in Class 1 National Insurance contributions on earnings above £12,570.
This will be cut to 10% from January 6. However, the threshold for when you start paying remains frozen until April 2028 - this means more people are still being dragged into paying tax when their pay increases.
5. Inflation - January 17
The latest inflation data from the Office for National Statistics will be released on January 17. Inflation is a measure of how prices have changed over time and is currently at 3.9%.
At its highest point, inflation reached 11.1% in the 12 months to October 2022. The Bank of England has a target of 2% inflation, meaning the current rate is still almost double this target.
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6. Online self-assessment deadline - January 31
If you have to submit a self-assessment tax return, the deadline for filing is January 31. If you miss this deadline, you face a fine of at least £100 - even if you have no tax to pay.
You also need to pay any tax you owe for the previous tax year. The deadline for registering for self-assessment was October 5.
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