British households are facing “the year of the squeeze” in 2022 as soaring energy bills, rising taxes and high inflation eat into incomes, according to a think tank.
Real wages will effectively stagnate next year, rising just 0.1 per cent, with families set to be £1,200-a-year worse off from April when a price cap on energy bills is raised and a tax increase comes into effect, according to the London-based Resolution Foundation.
This leaves millions of families facing a “cost-of-living catastrophe” next year, the think tank warned.
“2022 will begin with Omicron at the forefront of everyone’s minds,” said Torsten Bell, Resolution’s chief executive. “But while the economic impact of this new wave is uncertain, it should at least be short-lived. Instead, 2022 will be the ‘year of the squeeze’.”
UK inflation has already risen past the 5 per cent mark, hitting 5.1 per cent in November – the highest level since September 2011 – with expectations of 6 per cent next year – the highest rate in three decades.
This will hit consumers who are already grappling with the fallout from the coronavirus pandemic as well as higher fuel bills at the petrol pump and a shortage of goods at supermarkets amid the supply chain crisis.
Households have also faced rising energy bills, as wholesale gas prices soared in recent months, hitting a new record last week of £4.50 per therm.
In April, the higher energy bills price cap is set to be increased, which the Resolution Foundation said will add an additional £500 to spending.
Failing energy firms could then see a further £100 added to energy bills, while a 1.25 per cent rise in National Insurance contributions will cost the average household £600 a year, taking the total hit to incomes to £1,200.
The energy price rise will disproportionately affect low-income families who spend more of their income on energy, accounting for 12 per cent of the income of the poorest households compared with 8.5 per cent now.
Meanwhile, higher earning families will be hit harder by April's National Insurance rise, which would lift tax bills by an average of £750 a year.
By the end of 2024, real wages would still be £740 a year lower than if the UK's "already sluggish" pre-pandemic pay growth continued.
"The overall picture is likely to be one of prices surging and pay packets stagnating," Mr Bell said.
"In fact, real wages have already started falling, and are set to go into next Christmas barely higher than they are now. The peak of the squeeze will be in April, as families face a £1,200 income hit from soaring energy bills and tax rises."
To offset this cost-of-living crisis, the Foundation said the government must act to reduce energy costs with options to reduce the increase in the energy cap including compensating suppliers for the difference, and extending the time period to recoup the cost of the company collapses this year.
“On current trends, this time next year we’re likely to look back on a 2022 defined more by a cost of living crunch than the Omicron wave that will dominate its start,” the Resolution Foundation said.
FA CUP FINAL
Chelsea 1
Hazard (22' pen)
Manchester United 0
Man of the match: Eden Hazard (Chelsea)
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WTL%20SCHEDULE
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MATCH INFO
Manchester City 1 Chelsea 0
De Bruyne (70')
Man of the Match: Kevin de Bruyne (Manchester City)
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Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
RESULTS
Main card
Bantamweight 56.4kg: Mehdi Eljamari (MAR) beat Abrorbek Madiminbekov (UZB), Split points decision
Super heavyweight 94 kg: Adnan Mohammad (IRN) beat Mohammed Ajaraam (MAR), Split points decision
Lightweight 60kg: Zakaria Eljamari (UAE) beat Faridoon Alik Zai (AFG), RSC round 3
Light heavyweight 81.4kg: Taha Marrouni (MAR) beat Mahmood Amin (EGY), Unanimous points decision
Light welterweight 64.5kg: Siyovush Gulmamadov (TJK) beat Nouredine Samir (UAE), Unanimous points decision
Light heavyweight 81.4kg: Ilyass Habibali (UAE) beat Haroun Baka (ALG), KO second round
The five pillars of Islam
SPECS
Engine: Two-litre four-cylinder turbo
Power: 235hp
Torque: 350Nm
Transmission: Nine-speed automatic
Price: From Dh167,500 ($45,000)
On sale: Now
How does ToTok work?
The calling app is available to download on Google Play and Apple App Store
To successfully install ToTok, users are asked to enter their phone number and then create a nickname.
The app then gives users the option add their existing phone contacts, allowing them to immediately contact people also using the application by video or voice call or via message.
Users can also invite other contacts to download ToTok to allow them to make contact through the app.
if you go
The flights
Emirates have direct flights from Dubai to Glasgow from Dh3,115. Alternatively, if you want to see a bit of Edinburgh first, then you can fly there direct with Etihad from Abu Dhabi.
The hotel
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Located in the heart of Mackintosh's Glasgow, the Dakota Deluxe is perhaps the most refined hotel anywhere in the city. Doubles from Dh850
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Events and tours
There are various Mackintosh specific events throughout 2018 – for more details and to see a map of his surviving designs see glasgowmackintosh.com
For walking tours focussing on the Glasgow Style, see the website of the Glasgow School of Art.
More information
For ideas on planning a trip to Scotland, visit www.visitscotland.com
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
RESULT
Shabab Al Ahli Dubai 0 Al Ain 6
Al Ain: Caio (5', 73'), El Shahat (10'), Berg (65'), Khalil (83'), Al Ahbabi (90' 2)
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
The stats
Ship name: MSC Bellissima
Ship class: Meraviglia Class
Delivery date: February 27, 2019
Gross tonnage: 171,598 GT
Passenger capacity: 5,686
Crew members: 1,536
Number of cabins: 2,217
Length: 315.3 metres
Maximum speed: 22.7 knots (42kph)
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less