New financial changes will impact the personal finances of everyone in the UK in 2025 as some households face higher bills and others benefit from new savings. Throughout 2025, a range of changes will take effect, including increases in household costs, like energy and water bills, as well as the TV licence fee.
Transportation costs will also rise, with new bus fare caps and a hike in train ticket prices scheduled for March. On the other hand, individuals receiving benefits from the Department for Work and Pensions (DWP) or HM Revenue and Customs (HMRC) will see increased payments starting in April.
There will also be significant changes to Universal Credit rules and the earnings threshold for Carer’s Allowance, affecting certain claimants. For those with Premium Bonds, the prize rate will be reduced, while first-time homebuyers will face new stamp duty charges. The Manchester Evening News has outlined the key changes affecting households in 2025.
Energy bills to rise – January 1
Households will see an increase in energy bills starting on January 1. Ofgem confirmed that the price cap will rise by 1.2%, leading to a £20 annual increase in bills, from £1,717 to £1,738. This follows a 10% increase in October.
Ofgem has advised customers to shop around for better deals, which could help save up to £140 annually. Officials say the new price cap is significantly lower than last year and much less than during the energy crisis caused by the 2022 Russian invasion of Ukraine.
Bus fare cap to rise – January 1
The £2 cap on bus fares will rise to £3 in the new year. This cap, implemented in January 2023, applies to most routes outside London, where fares are capped at £1.75.
The increase will still save passengers up to 80% on some routes, and fares will increase with inflation for routes already under £3. However, Greater Manchester will maintain the £2 cap throughout 2025.
Higher fees for private schools – January 1
From January, the VAT exemption on private school fees will be removed, raising costs for some parents. The government aims to use the additional revenue to fund 6,500 new teachers in state schools. While some private schools may absorb the VAT costs, others could raise fees by 5% to 10%.
Premium Bond prize rate reduction – January 2
Starting January 2025, NS&I will reduce the Premium Bond prize fund rate from 4.15% to 4%. This will lead to fewer prizes, including a decrease in the number of £100,000 and £50,000 prizes. Despite the rate cut, the odds of winning remain at 22,000 to 1.
Ofcom rules on mobile and broadband prices – January 17
Ofcom is introducing new rules preventing mobile phone and broadband providers from linking price hikes to inflation during contracts. This change will ensure customers know exactly how much their prices will increase, offering more transparency in service contracts, officials say.
Cheaper pub pints, but other drinks rise – February 1
From February 1, alcohol duty rates will fall for draught drinks by 1.7%, leading to a 1p reduction in the price of a pint. However, alcohol duties on other beverages like wine and spirits will increase in line with the Retail Price Index (RPI), continuing the trend of significant hikes in recent years.
Interest rate cuts expected – February 6
Interest rates are predicted to be fall in 2025 – possibly several times. Although the Bank of England’s Monetary Policy Committee recently kept the rate at 4.75%, economists expect a gradual decrease, with the first cut potentially happening in February.
Train fares to increase – March 2
Train fares will increase by up to 4.6% from March 2, with most railcards also rising by £5. The increase is based on the Retail Price Index (RPI) inflation rate. However, railcards for disabled passengers will remain unchanged.
Council tax hike – April
From April 2025, council tax will rise by more than £100 for the average Band D household. The increase is expected to raise an additional £1.8 billion for local authorities. Councils can raise tax rates by 3%, with an additional 2% allowed for adult social care.
Water bills to rise – April 1
Water bills in England and Wales will rise by an average of £86 in 2025, part of a wider £104 billion upgrade in the sector. The total rise will be 36% over the next five years, with a significant £86 increase expected next year.
Benefits and pensions increase – April
Starting in April, most working-age benefits will rise by 1.7% in line with the Consumer Price Index (CPI), while state pensions will increase by 4.1%. This rise will mean up to £470 more for over 12 million pensioners.
TV licence fee to rise – April
The BBC licence fee will increase by £5 to £174.50, following the previous £10.50 rise in 2024. The fee will continue to rise annually in line with CPI inflation. The government is also expanding the Simple Payment Plan to make payments more manageable for struggling households.
National living wage increase – April 1
The National Living Wage will increase from £11.44 to £12.21 an hour, benefiting over 3 million workers. This will mean an extra £1,400 annually for full-time workers. The National Minimum Wage for 18 to 20-year-olds will rise to £10.00 an hour, the largest increase on record, officials say.
Universal Credit debt repayment changes – April
From April, the new Fair Repayment Rate will cap deductions from Universal Credit payments at 15%, down from 25%. This change will benefit approximately 1.2 million claimants, saving them £420 a year.
Carers Allowance earnings threshold to increase – April
The earnings threshold for Carer’s Allowance will rise by £45 a week, enabling around 60,000 additional carers to qualify for the benefit. The new threshold will allow carers to earn £196 per week before losing eligibility, officials say.
Tax hikes for motorists – April 1
Vehicle Excise Duty (VED) for petrol, diesel, and hybrid vehicles will increase significantly in April, especially for higher-emission cars. Electric vehicle (EV) drivers will see a small increase in their first-year VED, while other vehicle categories will face substantial hikes.
Stamp duty changes – April 1
From April, first-time buyers in England and Northern Ireland will see the nil-rate band for stamp duty – that is, what value of property is charged nothing in stamp duty – reduced from £425,000 to £300,000. The reduced rate of 5% will also be limited to properties costing up to £500,000. For current homeowners, the nil-rate threshold for stamp duty will drop from £250,000 to £125,000.
Abolition of non-dom tax status – April 6
The UK government will abolish the non-dom tax regime, requiring residents to pay taxes on their worldwide income. This change aims to ensure that individuals making the UK their permanent home pay taxes on all their income.
Free childcare expansion – September 1
Starting in September, working parents of children aged nine months and above will be eligible for 30 hours of free childcare per week until their child starts school. The expansion is part of a broader government initiative to increase capacity and support working families.
Higher university tuition fees – September
University tuition fees in England will rise by 3.1% in 2025, increasing the cap from £9,250 to £9,535. Additionally, maintenance loans for students will increase by £414 per year to support those facing rising living costs.