Product Promotion Network

Energy

How to avoid paying an exit fee when you switch energy tariffs

Compare gas and electricity suppliers and you’ll find that many charge an exit fee if you want to switch. But you don’t always have to pay an exit fee – we can tell you how to avoid it. Our research found that up to one in ten energy customers who haven’t switched energy supplier say they can’t do so because they have a fixed contract.

These contracts often charge a termination fee to leave before the end of the deal. But choose and act carefully, and you can avoid paying an exit fee altogether. We’ve found that several of the cheapest gas and electricity deals from small companies have no exit fees.

Plus, towards the end of your fixed tariff, suppliers can’t charge you a fee if you want to leave. Below, we reveal the cheapest energy deals with no exit fees.

To find the best energy deal for you straight away, use Which? Switch to compare gas and electricity prices[1].

Or you can phone us on 0800 410 1149 or 01259 220235.

Five things you should know about exit fees

If you’re signed up to a fixed-term tariff and want to get out of it before the end of the contract, you’ll often have to pay. But don’t let you put this off; check how much you could save by switching, and subtract the exit fee to see if you’d still be better off.

  • Exit fees vary from ?5 to ?30 per fuel. So you could face a ?60 fee to switch for a dual-fuel deal.
  • Some suppliers may waive the exit fee if you switch to another of its tariffs.

    Ask your supplier if it will do this to keep you as a customer.

  • If you’re moving home, you should be able to avoid exit fees – as long as you keep your tariff and only change the address.
  • Your supplier cannot charge you an exit fee in the last 49 days of your tariff; read on to find out more about this.
  • Not all fixed tariffs have exit fees attached. This leaves you free to pick a cheap deal and switch again if you spot a better one elsewhere.

Cheapest gas and electricity tariffs with no exit fee

We scoured the market to find the cheapest energy deals without exit fees attached; perfect if you want the flexibility to switch again. Here we’ve listed the top three gas and electricity tariffs, which are available to all energy customers in England, Scotland and Wales.

We’ve also calculated how much these tariffs would save the average household in a year, compared with Npower[2]‘s standard tariff (the priciest Big Six variable deal) and British Gas[3]‘s standard tariff (the cheapest Big Six variable deal).

  1. Usio Energy Supply[4] Smart Home after 7pm 0.2 – Paperless (?837). ?329 cheaper than Npower. ?264 cheaper than British Gas. Usio Energy’s ‘Green’ and ‘Lifestyle variable’ tariffs are up to ?5 pricier than this.
  2. Bulb[5] Vari-Fair – Paperless (?856). ?311 cheaper than Npower. ?247 cheaper than British Gas.
  3. Iresa[6] Flex5 12 month Fixed Direct Debit – Paperless (?860). ?306 cheaper than Npower. ?241 cheaper than British Gas.

If you live in north Wales, north-west England or Yorkshire, there’s a cheaper tariff from Eversmart Energy (?796). Breeze Energy is also selling a dual-fuel tariff (?834) but it’s not available to those who live in north Scotland.

Happy to be tied in for a year to save even more? Check the top five cheapest energy deals[7] to see you much you could save.

When can’t your energy supplier charge you an exit fee?

When you’re in the last 42-49 days of a fixed energy tariff, you do not have to pay a fee to switch. In this time, your energy supplier should send you a letter telling you that your gas and electricity tariff is expiring.

It will set out the cheapest deal for you and what will happen if you don’t sign up to a new tariff. Usually this will mean that you will roll automatically onto its standard variable tariff (often pricier). Remember that the cheapest deal your supplier tells you about is its cheapest tariff; you might save more on your bills by choosing a tariff with another supplier.

If you are on a standard variable energy tariff (an out-of-contract tariff), it has no end date and no exit fees. So you can move to a new energy deal any time. Find out how to get the best energy deal[8].

Our energy pricing research

Our data is from Energylinx.

Prices are based on a dual-fuel tariff available in all regions for a medium user (using the Ofgem averages of 3,100kWh electricity and 12,000kWh gas per year), paying by monthly direct debit, with paperless bills, and are averaged across all regions. Exact prices can vary according to region, usage and payment method. Prices are rounded to the nearest whole pound.The prices given above are correct on 6 November 2017.

*Survey of 4,773 members of the general public who haven’t switched energy supplier, October 2016.

References

  1. ^ compare gas and electricity prices (switch.which.co.uk)
  2. ^ Npower (www.which.co.uk)
  3. ^ British Gas (www.which.co.uk)
  4. ^ Usio Energy Supply (www.which.co.uk)
  5. ^ Bulb (www.which.co.uk)
  6. ^ Iresa (www.which.co.uk)
  7. ^ top five cheapest energy deals (www.which.co.uk)
  8. ^ best energy deal (www.which.co.uk)

We know if you’re paying too much for energy

Your age and where you live in the UK determine how likely you are to have switched energy supplier or moved gas and electricity tariff, exclusive Which? research reveals. Take our quiz to find out if you’re capable of beating the energy rip-off. Common energy deal pitfalls that can result in you paying more than you need to for gas and electricity include how often you switch energy supplier, or how long you stay on the same gas and electricity deal.

And how you pay can also have an impact on the price. We’ve created a quiz that will tell you whether or not you’re paying too much for energy (spoiler: you probably are). It will also tell you what you can do to save money on your energy bills as the temperatures drop.

Which? energy rip-off quiz

Can’t see the quiz?

Go to beat the energy rip-off[1].

Whether you’re paying too much depends on your age and where you live

More than a third (34%) of those aged 18-24 have always been a customer of their current gas and electricity supplier – perhaps unsurprisingly, since they’re the newest customers who’ve had the shortest opportunity to switch.

Least likely to have switched energy supplier: 18-24s

Overall, a quarter (25%) of adults have not actively switched energy firm. If you live in Northern Ireland, you’re almost as likely to have always been a customer of the same energy company: 33% of you told us that’s the case. If you’re aged 65 or over, the majority (55%) of you have been with the same energy company for at least five years.

Most likely to have been with the same energy company for more than five years: 65+

Less than half (47%) of adults of any age have been with their supplier longer than five years.

Just 25% of those aged between 34 and 45 have been with their current energy firm this long.

Who’s the least likely to have changed tariff?

More than seven in ten (72%) energy customers in Northern Ireland say they have never changed their tariff or deal while with their current company. Although there is less choice in Northern Ireland than in England, Scotland and Wales, not comparing tariffs means you risk missing out on the best deals. By age, 45-54s are the most guilty of staying on the same tariff.

Nearly half (48%) admit they’ve not changed their tariff, compared with the overall average of 42%.

Have you changed the way you pay your energy bill?

Changing payment method isn’t particularly common. Paying by direct debit is usually cheapest, so there’s no need to change if you do this. But if you pay when you receive each bill, you’ll often be paying more, according to our research.

Least likely to have changed payment method: 55+

If you’re aged over 55, check how you pay.

You’re the least likely not to have changed your payment method – 80% of 55-64s and 82% of those aged 65+ told us this. So this age group is most likely to still be paying by pricey standard credit.

How to save money on energy

Follow our simple tips to save cash over the winter:

  • Switch energy supplier[2] to save up to ?346. That’s comparing the priciest Big Six standard tariff (Npower[3]) with the cheapest deal available.
  • Program your heating[4] to come on only at times when you need it (and off when you don’t – during the night, for example).

    Consider setting it to switch off 20 minutes before you usually go out, as there will still be residual heat in your home.

  • Turn down radiators in rarely used or empty rooms and shut the door so you’re not heating areas you don’t need to. Plus, follow other money-saving heating controls tips[5].
  • Replace your light bulbs with energy-saving LED bulbs[6]. An LED bulb costs around ?1.71 per year to run and could cut ?180 from your energy bills over its lifetime, compared with old-style bulbs.
  • Draught-proof[7] your house to help keep warm air in and cold air out.

    Much of it you can do yourself, saving up to ?50 on your bills in a year and making your home more comfortable.

Our energy research

Based on an online survey of 8,851 UK adults in September and October 2016. Savings figures based on the difference between the priciest standard tariff from a Big Six energy company (Npower) and the cheapest deal on the market, correct on 31 October 2017. Pricing data is from Energylinx, based on a medium user (using Ofgem averages of 3,100kWh electricity and 12,000kWh gas per year), paying by monthly direct debit, and with paperless bills.

Prices are averages across England, Scotland and Wales.

References

  1. ^ beat the energy rip-off (www.which.co.uk)
  2. ^ Switch energy supplier (switch.which.co.uk)
  3. ^ Npower (www.which.co.uk)
  4. ^ Program your heating (www.which.co.uk)
  5. ^ money-saving heating controls tips (www.which.co.uk)
  6. ^ LED bulbs (www.which.co.uk)
  7. ^ Draught-proof (www.which.co.uk)

£10m a month handed out in stamp duty refunds

HMRC is refunding around ?10m a month to home buyers who have fallen foul of the government’s buy-to-let stamp duty surcharge. A 3% surcharge for investors and people buying second homes brought total stamp duty receipts to a record ?2.6bn in the last quarter – but it’s also affected many normal home movers. In total, around ?185m has been refunded to 15,000 buyers since the introduction of the new rules in April last year.

Here, we take a look at how buyers are being affected by the tax, and explain how you can work out how much stamp duty you’ll need to pay.

  • If you’re just starting the process of buying a home, you can get impartial, expert advice on finding the right mortgage by calling Which? Mortgage Advisers[1] on 0808 252 7987.

Home movers face initial surcharge

Under the current system, anyone who buys an additional home – either as an investment property or holiday home – needs to pay a surcharge of 3% on top of normal stamp duty rates[2]. While the rules aren’t targeted at people who are simply selling their current house (or ‘primary residence’) and buying a new one, many home movers are being caught up in the system.

When people complete on their new home before selling their existing one, they are technically ‘buying a second home’ – movers in this situation will need to pay the surcharge up front and then claim it back. Buyers can get their money back within three years, but the lack of a grace period between buying and selling properties means some movers are shelling out thousands more up-front than they might have expected.

  • To learn more about whether you’ll need to pay the stamp duty surcharge, check out the Q&A in our full guide on buy-to-let stamp duty[3]

Stamp duty surcharge: how it works

The additional rates apply to anyone buying a property over ?40,000, and can add a significant amount on to your bill. The table below shows how the system works for standard buyers (meaning those buying a primary residence) and those who need to pay the additional rate.

Portion of property price Standard rate Buy-to-let rate ?0-?40,000 0% 0% ?0-?125,000 0% 3% ?125,001-?250,000 2% 5% ?250,001-?925,000 5% 8% ?925,001-?1.5m 10% 13% ?1.5m+ 12% 15%

For example, take a ?250,000 property:

Standard rate of stamp duty

  • Portion 1: ?0-?125,000 – 0% tax
  • Portion 2: ?125,001-?250,000 – 3% tax = ?2,500.
  • Total: ?2,500

Additional rate of stamp duty

  • Portion 1: ?0-?125,000 – 3% tax = ?3,750
  • Portion 2: ?125,001-?250,000 – 5% tax = ?6,250
  • Total: ?10,000

Buy-to-let stamp duty calculator

If you need to pay stamp duty at the higher rate, you can find out how much your total bill will be using our buy-to-let stamp duty calculator. If you’re buying a property that isn’t eligible for the additional rate of stamp duty, you can use our standard stamp duty calculator[4].

Exchanging contracts

You can avoid paying a stamp duty surcharge by completing on both of your properties[5] at the same time – although this isn’t always possible.

Indeed, a recent report found that four in ten buyers and sellers face delays[6] at this step of moving home. The government is currently consulting[7] on ways it can speed up the home moving process in the future.

Proposed stamp duty reforms

The latest figures show that stamp duty receipts are up 23% in a year – but some have argued that the tax is dampening down the housing market. With that in mind, some MPs have proposed sweeping reforms to the system, with speculation heating up ahead of the Autumn Statement.

In the last few months alone, proposals to cut stamp duty for first-time buyers and downsizers, to offer tax breaks for energy efficient homes[8], or to pass the tax onto sellers have all been voiced. Despite the rumours, however, there’s been no clear indication the government is seriously considering an overhaul in this month’s Budget speech[9]. Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029).

Which? Mortgage Advisers and Which? Money Compare are trading names of Which?

Financial Services Limited.

References

  1. ^ Which?

    Mortgage Advisers (mortgageadvisers.which.co.uk)

  2. ^ stamp duty rates (www.which.co.uk)
  3. ^ buy-to-let stamp duty (www.which.co.uk)
  4. ^ stamp duty calculator (www.which.co.uk)
  5. ^ completing on both of your properties (www.which.co.uk)
  6. ^ four in ten buyers and sellers face delays (www.which.co.uk)
  7. ^ currently consulting (www.which.co.uk)
  8. ^ tax breaks for energy efficient homes (www.which.co.uk)
  9. ^ Budget speech (www.which.co.uk)

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