11 household bills are set to skyrocket between January and April, millions have been warned. As we head deeper into the new year and beyond Christmas, UK households have been urged to prepare their finances and batten down the hatches.
The Cost of Living crisis is continuing as UK households are told to find more cash and make their pennies stretch further as we head into 2025 and away from the festive period, which took place just days before the first hike of the year: the energy price cap.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “The news of a rise in our forecast will be disappointing to households’ who will no doubt have been hoping for relief from recent cap rises. However, the turbulence in wholesale markets – a level of volatility we haven’t seen for months – reminds us to remain cautious of predictions, which could very well increase or decrease several times before the April cap is set.
READ MORE All parts of England that WON’T see snow this weekend according to Met Office
“With a Trump presidency on the horizon, and an uncertain geopolitical situation in the Ukraine and the Middle East, wholesale market volatility looks set to remain. To add to the wholesale turbulence, other cost measures being decided upon by Ofgem and the government have the potential to move the cap up or down. As we look ahead, consumers must brace for continued fluctuations.
“Ultimately, the security of energy supply, and Ofgem’s evolving policies will shape the trajectory of bills as we move into 2025 and beyond. It’s crucial for policymakers and industry stakeholders to work together to ensure fair and sustainable energy pricing for households.”
Energy bills
The Ofgem energy price cap sets the maximum amount you can be charged for unit rates of gas and electricity, as well as standing charges. For the average household that pays by direct debit, the price cap is rising from £1,717 to £1,738 a year from January 1.
The Ofgem price cap is updated every three months, and Cornwall Insight currently predicts it will rise to £1,783 a year – up almost 3%. At the highest point, energy bills soared to above £4,000 in the winter of 2023, but households were covered by the temporary Energy Price Guarantee cap which saw energy bills capped at £2,500.
Council tax
Council tax bills are likely to go up. The government announced that the cap on increases would stay at 5%, so the average bill could go up by about £100 a year. From now, councils can charge up to two times the normal rate on second homes if they choose.
Government statistics show the average band D council tax set by local authorities in England for 2024-25 was £2,171, which represented an increase of £106 or 5.1% on the previous year. For those in the most expensive band H households, last year’s £4,342 bill will increase by £217.
Mobile and broadband contracts
A ban on inflation-linked mid-contract price rises on phone, broadband and TV comes into force. From this date, the regulator, Ofcom, says contracts must include details of any future price rises in pounds and pence, so that consumers know what to expect from the deal they have signed up to.
Alcohol
New rates of duty on alcoholic drinks come into force. Some were announced in the budget and some were announced previously but delayed. Duty on draught products will be cut by 1p, while that on other drinks rises in line with the RPI measure of inflation.
Duty on wine will from now on depend on its alcohol content, with higher ABVs (alcohol by volume) attracting more tax.
Food prices
Rising shop prices are expected to place further strain on household budgets this year, as food inflation begins to climb again. After a period of decline through much of 2023, food prices began rising in September 2024, and the trend shows no signs of slowing.
Major UK retailers, including Tesco, Sainsbury’s, and Marks & Spencer, have cautioned that higher employer National Insurance contributions (NICs) announced by Chancellor Rachel Reeves will drive up costs, which are likely to be passed on to consumers.
Bus fares
The cap on bus fares for journeys in England goes up from £2 to £3, where it will be fixed until the end of 2025. The limit does not apply everywhere – Manchester, for example, will retain a £2 cap, while in London fares are capped at £1.75.
VAT on private schools
VAT is now payable on private school fees, charged at a rate of 20%. The tax will apply to fees paid in advance since 29 July 2024 if they relate to 1 January 2025 onwards. Schools do not have to pass on the full amount to parents or whoever is footing the bill, but some, including Eton, have announced that they will.
Train fares
Regulated train fares in England go up by 4.6%, while most railcards will increase in price by £5, or 17%. In London, tube fares also rise by 4.6%. The increase in rail fares will affect about half of those available, and is based on last July’s rate of RPI.
Stamp duty
Temporary stamp duty thresholds in England and Northern Ireland come to an end on April 1, meaning first-time buyers will have to pay tax on homes worth more than £300,000, down from £425,000, and the threshold will apply if the property costs £500,000 or less, down from £625,000. Movers will start paying the tax on any property over £125,000, down from £250,000.
TV licence
The TV licence is set to rise by £5 on April 1, increasing the annual expense from £169.50 to a hefty £174.50. For the estimated 3,600 households with a black and white TV, the cost of a licence will increase to £58.50 per year.
The fee increases every year in line with inflation until 2027 when the framework is set to be reviewed. However, thousands of people can qualify for a half-price – or free – TV licence without realising, making it key to eligibility.
Water bills
Water bills in England and Wales will rise by 36% over the next five years, as suppliers were accused of forcing struggling households to pay for years of underinvestment to fix leaky pipes and cut pollution. The industry regulator Ofwat said on Thursday that, from next April, it would allow companies to raise average bills by £31 a year, or £157 in total, over the next five years to £597 by 2030 to help pay for investment. That represents a 36% increase before inflation, which will be added on top.
The bill increases are front-loaded during the five years, meaning households will pay an average of £86 more next year, with smaller increases over the following years.