April will see Household Budgets Squeezed
The Government’s reforms to reduce the deficit is set to hit the nation in the form of tax increases and welfare cuts in April, indicating a further struggle for household budgets.
In total, Credit Action warns there are 45 major changes that will take effect next month, including a drop in the higher rate income tax threshold, all National Insurance contributions will increase by one percent, fuel duty will increase by one pence per litre above inflation, and child benefit cuts.
The average household is set to be £480 worse off because of the indirect tax changes which took effect in January, according to the Institute for Fiscal Studies (IFS).
They predict households will be a further £200 worse off following the changes to tax and welfare benefits set to take effect from April.
“The 45 major changes that we have identified will affect everyone – there really is no way to avoid them,” said Joanna Parsley, Credit Action associate director.
“Changes to tax and welfare benefits coupled with rising energy and food prices, and fears over potential interest rises and further job losses, mean that household budgets in 2011 will continue to be squeezed.”
Everyday Living Causes Overspending
Already the nation is struggling to keep within their means, as research by Moneysupermarket showed almost a quarter dip into their savings to fund everyday living expenses.
Those who are already finding it impossible to make their income pay for their essential outgoings without dipping into savings, or going overdrawn, will find it even worse following the next batch of changes set to take place next month.
“Many Brits are clearly feeling the pinch more than ever and are being forced to use their savings to pay for everyday household living,” said Kevin Mountford, Moneysupermarket’s head of banking.