Research by RIFT Tax Refunds reveals that, by March 2023, rising energy prices and stagnant income means household bills will cost 11% of the average person’s salary.
As autumn and winter arrive, the cost of living crisis is expected to enter its most crucial and damaging period yet. The rising cost of energy and its impact on household bills is set to be a central part of this crisis and RIFT’s new research shows just how significant these price rises are going to be.
In August 2020, the average annual household energy bill was £1,042. Today, this has increased by £929 to a total of £1,971. By October this year, bills are expected to see a remarkable rise to £3,359, before increasing again in March 2023 when they’re expected to cost £3,616.
To understand the true impact of these rising prices, RIFT has also analysed historic and projected changes in the average earnings. The research has found that back in August 2020, the average salary was £31,646 meaning that annual energy bills equated to 3.3% of income.
This percentage has increased slowly over the past two years to the point where today, with an average salary of £32,390, bills account for 6.1% of income.
This average salary is not expected to increase before the end of 2022 so, by October, rising energy costs mean household bills will equate to a massive 10.4% of salaries.
Employers predict that, after 2022, we will see a 3% rise in salaries which, when you consider that inflation is soaring past 10%, is clearly not enough. In fact, it means that by March 2023, the average person is going to be earning £33,362 a year and giving 10.8% of it to their energy provider.
CEO of RIFT Tax Refunds, Bradley Post said, “People are rightly angry about the current situation. Energy prices are soaring while salaries remain stagnant. It means households are having to completely rethink their budgets and make real personal sacrifices in order to pay the energy suppliers. To this end, people are buying less, travelling less, even eating less.
To go, in the space of just three years, from household bills costing 3% of income to costing 11% of income is extraordinary and quite frightening. The government is pledging support but, while nobody can yet confirm what this will look like, it’s expected to be a drop in the ocean for most households.
And don’t forget, this research is just looking at energy bills, not even accounting for the rising cost of food and fuel, etc, which will eat up even more of our earnings.
At times like this, every penny is vital so I would encourage everyone to consider whether they might be eligible for a tax refund. There is a good chance you will be, whether you’re self employed or on PAYE. The average refund is currently £1,500 which doesn’t come close to making up for rising prices, but can definitely make a positive difference at a time when positivity is a rare commodity indeed.”