CNBC's UK Exchange newsletter: Brace yourself for rising bills as new tax year kicks off

Hello and welcome to this week's CNBC U.K. Exchange.

This week I am assessing the many changes taking place with the start of the new tax year and the largely negative consequences they will have for British households and businesses.

These changes come on top of an array of higher costs for a range of services that kicked in at the beginning of the month.

Along with higher energy costs, due to the Middle East conflict, it all promises to add to the unpopularity of the Labour government in coming months.

For most countries in Europe, Latin America and much of Asia, the new tax year starts on Jan. 1. In Britain, due to a historical quirk, it starts on April 6.

Since medieval times, it had begun on March 25, which was also New Year's Day.

But in 1752, the government replaced the old Julian calendar, introduced by Julius Caesar, with a more accurate solar calendar.

This shortened the year by 11 days and so officials moved forward the start of the new tax year by the same amount. It moved forward by another day in 1800 to compensate for a rogue leap year.

The start of the 2026-27 tax year will be hard on working Britons and small businesses. Tax thresholds and allowances remain frozen, so those getting pay increases in line with inflation — and those benefiting from a rise in the minimum wage — will see more of it swallowed by income tax.

Some workers will find themselves moving into a higher tax bracket. More estates will be dragged into paying inheritance tax while changes targeting wealthy 'non-dom' residents also kick in. Tax rates on dividends have risen and agricultural and business property reliefs have been made less generous, as have tax breaks for investors in venture capital trusts.

For an estimated 860,000 sole traders and landlords, new 'Making Tax Digital' rules will oblige anyone earning more than £50,000 ($66,419) from self-employment or property to send HM Revenue and Customs quarterly updates on their income and expenses. The Federation of Small Businesses has warned of higher compliance costs.

At the same time, hundreds of thousands of businesses face higher business rates — a long-running sore — following a revaluation of the rateable values of all commercial properties in England and Wales. Employers are now also obliged to provide maternity, paternity and paid sick leave from the moment an employee joins.

There will be some winners. Benefit payments are going up and a cap, limiting benefits to two children per household, has been scrapped.

Other increases have already kicked in on April 1 which, confusingly, was the start of the government's fiscal year.

Most mobile and broadband suppliers have raised charges, while Ofwat, the regulator, has permitted water companies to increase bills to fund infrastructure improvements. Water UK, the industry body, estimates bills will rise by an average 5.4% or around £32.40 a year. 

Also going up are the TV licence fee that funds the BBC and the vehicle excise duty motorists must pay to keep their car on the road legally.

The biggest hike in bills for households will be the rise in Council Tax, a hypothecated levy (paid from post-tax earnings) that funds local services. Most councils in England are raising this by 4.99%, representing an average annual increase of £114, but some, like Shropshire, Worcestershire and North Somerset, are doing so by as much as 8.99%.

All of which, on top of higher petrol prices due to the Middle East conflict, will add to inflation and significantly weaken disposable incomes. It will certainly negate any savings from a freeze in regulated rail fares and the government's decision to switch some green levies from household bills to general taxation. 

Meanwhile, those incomes will also buy less as employers in sectors like retail and hospitality raise prices to reflect higher costs, particularly the rise in the minimum wage and increased energy bills.

Stuart Machin, chief executive of leading retailer Marks & Spencer, wrote two weeks ago that government-imposed levies now accounted for more than half of his company's energy costs.

The energy price cap, meanwhile, is expected to rise again in the summer due to the war in the Middle East. It promises to be an exceptionally uncomfortable summer and early autumn for consumers — and, by extension, the government.

— Ian King

Novo Nordisk's Wegovy cleared by UK drug price watchdog for heart disease. The new recommendation from the National Institute for Health and Care Excellence will significantly expand access to Wegovy on the country's National Health Service (NHS).

Farmers face price rises due to fertilizer shortage. U.K. farmer, Caroline Harriot, spoke with CNBC's Ben Boulos about the risks to farming and food inflation if fertilizer is unable to pass through the Strait of Hormuz.

Trump said he was considering pulling U.S. out of 'paper tiger' NATO. The comments came a day after the president singled out the U.K. for criticism while urging other countries to take action on the Strait of Hormuz, the vital oil route that Iran has effectively blocked during the war.

— April Roach

APR 8: Halifax house price index for March

APR 14: BRC retail sales monitor for March

APR 16: GDP for February