AJ Bell expert issues '£100 free money' warning to 20million UK homes

AJ Bell expert issues '£100 free money' warning to 20million UK homes The money could prove handy with inflation continuing ot surge An expert at investment firm AJ Bell has urged people to follow three steps in the new year to make sure they are on a secure financial footing. Millions across the UK are finding the going tough at the moment. Inflation has remained persistently high, with the latest figures at 3.5 per cent, up from 3.1 per cent in August. And that could go up further in the new year as Ofgem's energy price cap is set to go up sharply due to the ongoing conflict between Israel, the US, and Iran. Throw in Christmas and increasingly chilly weather and many Brits are set for a trying few months financially. The Budget, announced by Chancellor of the Exchequer John Healey last week, has offered some respite, with up to 20 million households in England set to enjoy a £100 payment to help with their energy bills this winter. Prime Minister Andy Burnham has also cut VAT on domestic energy bills to 0, and continued the 5p cut on fuel duty. 'Ease that pain' Speaking on AJ Bell's Money & Markets podcast, Sarah Coles said that the changes would help, but there were other steps people needed to take to make sure they were prepared during what is a traditionally expensive time of year. "I think the big story was some of the changes they were making. They've been called 'little fixes' or 'everyday fixes'. It's like Bob the Builder - he's constantly on the mend. I think there are lots of different bits and pieces that they are hoping will add up," she said. "They've absolutely majored on energy this time around. The big change is this rebate. It's done through the council tax system which, if you remember back to 2022, that's how they did it last time. They are going to give people in those council tax brackets between A and D a £100 rebate. And that is a sizeable difference. "And then there are other bits and pieces. There is a VAT cut on electricity bills and the plan is to extend that. There are also changes to the green levies on these bills. The idea is that will be taken through general taxation other than being taken through bills. So all of these things will add up. "There is a bunch of different things which are importantly adding up. It is worth saying that we know the energy bill hit at the beginning of the year is going to be incredibly painful so this is bracing people for that. "What you were saying earlier about what is going to happen to interest rates is also really important because that is going to feed through into people's mortgages. Anyone who is coming up for remortgage is potentially facing much higher mortgage repayments. And then if you look at the changes to property income, you can find some landlords will build that into higher rents so that could rise as well. You have all of these things on the horizon so it is no surprise at all that what John Healey was really keen to point out from the off was that he was going to try and help ease that pain." Ensure our latest DWP headlines always appear at the top of your Google Search by making us a Preferred Source. Click here to activate or add us as Preferred Source in your Google search settings Three things to do She continued: "We know that pain is still going to be there - there is going to be a much higher cost and people do need to plan for them. "I'm not ringing the alarm bells and saying there is going to be that hideous inflation, but there is going to be some chunky increases and it is worth planning in advance, seeing what room you've got, and seeing where you can cut your costs so when you are hit in the face with them, you are not knocked out." £100 payment Estimates on how much bills could rise in January vary wildly. Analysts at Cornwall Insight are predicting a £276 climb, while others say it could be as much as £400. They are likely to be the biggest rise in four years, since Russia's full-scale invasion of Ukraine. Therefore, while £100 will help, people are still facing a price hike. It is available for people living in properties which are in council tax bands A to D in England, while funding will be given to Scotland, Wales, and Northern Ireland to make the payment as well. The Welsh Government has committed to a similar payment, while the Scottish Government said it would 'seek to replicate' it. The Northern Irish government does not have the legal authority to make the £100 payments unless it agrees its budget. AJ Bell's Dan Coatsworth said that there was a risk with the payment though: "What I thought was quite interesting was that the government said this £100 it's going to give to, I think it's about 20 million people. I think I'm expecting headlines. It's almost like there's a lottery win. You know, suddenly they're paying it straight into your bank account. "There's a risk there that people just see it as, "this is free money, I'm just going to go and spend it". Of course that would feed into the economy, but it's designed there to help with your energy bills. That's why you're getting it in January, when the price cap changes, not in December when you can use it to buy your Christmas presents." The Government has said the support is to help households with the cost of energy but, as it will go into your bank account, they have no way of regulating how the money is spent.