Eight money changes and Department for Work and Pensions and HMRC changes coming into force in January have been revealed. The first month of the year brings with it all manner of changes for UK households to wrap their heads around.
The DWP and HMRC are both shaking up things for taxpayers and benefit claimants, while the UK households up and down the country face a new energy price cap, too, as Ofgem forces through a uprated rate for bill payers.
From stamp duty hikes to energy bill rises, and higher rail and bus fares, all are due in early 2025. Below, BirminghamLive takes you through each of the changes to expect during the first stages of the calendar year as we approach mid-January and beyond…
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January 1 – latest price cap on household gas and electricity
The Ofgem energy price cap rose from £1,717 to £1,738 a year on January 1. This figure represents a household that uses an average amount of energy, and who pays by direct debit. Your bill can be higher or lower than this, depending on how much gas and electricity you consume. Ofgem updates its price cap every three months, so it will change again in April, July and October.
January 1 – the cap on bus fares for journeys in England goes up
From 1 January, a new £3 single fare cap has been introduced for bus journeys in England, rising from the previous 2 GBP initiative. This cap is being supported by 150 million GBP in government funding as part of its Plan for Change.
Local Transport Minister Simon Lightwood said: “Buses are vital to help people get to work, the doctor, or see their friends and family — they boost growth, support communities, and provide opportunity. That’s why we’re stepping in to make sure fares are capped at the lowest point possible, saving people up to 80% on travel and ensuring that our buses continue to be an attractive, affordable way to get around.
“As we rebuild Britain with our Plan for Change, this £150 million investment is just the beginning. Our Bus Services Bill is currently passing through Parliament and will hand power back to local authorities to choose how they want to run their local buses — giving them greater control over fares, routes, and timetables.”
January 1 – VAT is now payable on private school fees
The standard 20% VAT rate will be added to private school fees from 1 January 2025. Any fees paid from 29 July 2024 relating to the term starting in January 2025 and onwards will be subject to VAT. Private schools that are charities will lose charitable business rates relief – which provides an 80% discount on the rates they pay on their premises – from April 2025. Private schools are now able to register for VAT for education and boarding fees. Please check when you need to register for VAT because of these changes, using our new interactive guidance tool. HMRC will be hosting webinars on how to register for VAT, which you can sign up to here, or watch a recording.
January 15 – Inflation update
The first inflation update of the year will be released on January 15. Inflation is a measure of how prices have changed over time and is currently at 2.6%. At its highest point, inflation reached 11.1% in the 12 months to October 2022 – but despite its fall in recent months, it is now back above the Bank of England target of 2% inflation. New inflation data is released by the Office for National Statistics every month.
January 17 – ban on inflation-linked mid-contract price rises on phone, broadband and TV
From 17 January 2025, phone, broadband and pay TV providers will be prohibited from including inflation-linked, or percentage-based, price rise terms in all new contracts. This means consumers will be able to enter into contracts featuring £/p information ahead of annual price rises in 2025.
Over the last five years, average prices for broadband and mobile services in the UK have fallen in real terms. At the same time, companies have been investing in upgrading their networks, with availability of full fibre increasing tenfold and average speeds and data use doubling.
January 29 – Winter Fuel Payment end date
The Winter Fuel Payments should have been paid to all eligible households by January 29. If you haven’t received a letter to tell you you’ll be getting the money by then, you need to chase it by calling the Winter Fuel Payment Centre on 0800 7310160.
The DWP told the BBC it has 500 extra members of staff to process applications. If you still haven’t received your Winter Fuel Payment by January 29, and you believe you’re eligible, then you’ll be able to contact the Winter Fuel Payment Centre from this date.
Y ou won’t be eligible for a Winter Fuel Payment if you lived in a care home for the whole time from June 24 to September 22, 2024. You can still be eligible if you live in a care home on a temporary basis, which is less than 13 weeks by the end of the qualifying period.
You also won’t be eligible if you’ve been in hospital getting free treatment for more than a year, if you needed permission to enter the UK and your granted leave says that you cannot claim public funds, or if you are in prison for the whole of the week of September 16 to September 22, 2024.
If you live abroad, you’ll need to make a claim for a Winter Fuel Payment You must have moved to an eligible EEA country or Switzerland before December 31, 2020 and be covered by the Withdrawal Agreement, to get a Winter Fuel Payment. You must also have a genuine and sufficient link to the UK.
January 31 – HMRC deadline
Households face being issued a £100 fine from His Majesty’s Revenue and Customs (HMRC) if they miss an important January deadline. The government body has warned there is now just one month left for Self Assessment tax returns for the 2023 to 2024 tax year to be filed and paid.
Anyone who fails to do this by midnight on January 31, 2025 must then pay a £100 late filing fine for tax returns that are submitted up to three months late. This fee will increase even further if tax returns are submitted later than this and households will be charged interest on late payments.
January 31 – final day of old alcohol duty rates
As announced at Autumn Budget 2024, the government will reduce all Alcohol Duty rates for draught products by 1.7% in cash terms (or 5.1% if compared to the baseline expectation that rates would be increased with the Retail Price Index). This will increase the value of Draught Relief from 9.2% to 13.9% for qualifying beer and cider products and from 23% to 26.9% for qualifying wine, other fermented products and spirits.