The cost of living crisis is set to soar in the Uk in April as a host of new charges and taxes come into force. People will have to pay more for power – and there are a host of other bills set to rise in what has been branded ‘awful April’.
Despite a rise in minimum wages from April and average wages outstripping inflation, household budgets may still feel the squeeze. There is some good news for people receiving benefits as inflation-linked benefits and tax credits will rise by 1.7% from April 2025. The basic and new State Pensions will be uprated by 4.1% from April 2025, in line with the annual increase in the Average Weekly Earnings (AWE) index for May–July 2024.
However with serious increases in road tax, water bills, broadband, mobile, stamp duty and ‘fiscal drag’ from frozen tax thresholds, households are set to be hit in the pocket.
Here’s a rundown of seven ways your finances might take a hit:
1. Water bills.
Water bills for households in England and Wales are poised to swell by an average of £10 more per month. However, the actual increase is a postcode lottery, with companies like Southern Water cranking up annual bills by a whopping 47% to £703, while Anglian Water users will see a 19% hike to £626.
The final figures on your bill will be influenced by factors such as metered usage and how much water you splash out on. These charges are being front-loaded over the next five years, meaning the most significant surge is due this April. Water providers in England and Wales argue that the price pump is essential to pour funds into ageing infrastructure, including sewage systems, and to construct additional reservoirs. Up in Scotland, water bills are bracing for almost a 10% uplift. Scottish Water, a public entity, cites the need for investment to navigate the challenges of “drought and intense rainfall” as climate change takes its toll.
Meanwhile, domestic customers in Northern Ireland won’t face direct billing for water, thanks to funding from the devolved government.
2. Energy bills.
From April, households consuming an average amount of gas and electricity will see their annual energy bill rise by £111 to £1,849. This increase is due to regulator Ofgem raising the energy price cap in response to escalating wholesale costs and inflation.
The cap, which is revised every quarter, restricts how much suppliers can charge per unit of gas and electricity, but not the total bill – so higher usage means a heftier bill. This impacts 22 million homes across England, Wales, and Scotland.
Standing charges, which are fixed fees for connecting to a gas and electricity supply and vary regionally, are set to increase for gas but decrease for electricity. Ofgem advises households to consider a fixed tariff for some stability, despite rumours of prices falling in July.
3. Council tax.
It’s probable that your council tax, paid to your local authority, will also increase from April. In England, local authorities responsible for social care can raise council tax annually by up to 4.99% without necessitating a referendum or local vote. Smaller councils without social care obligations can hike bills by up to 2.99%. For the fiscal year 2025-26, the government is permitting Bradford, Newham, Birmingham, Somerset, and Windsor and Maidenhead to exceed the 4.99% cap, meaning they could impose even steeper council tax increases.
Council tax rates in Scotland, which have been frozen or subjected to minimal increases since 2007, are set for a hike come April, with some areas bracing for a surge of up to 10%. The Scottish government has pledged an additional £1bn for local authorities in the 2025-26 fiscal year to mitigate the impact of these increases. Meanwhile, in Wales, council tax could see a staggering rise of up to 15% in certain regions. Despite the Welsh government allocating £253m in its draft budget, council leaders argue that more funding is required.
Northern Ireland, on the other hand, operates on a domestic rates system instead of council tax, with all councils reporting district rate increases for the upcoming year.
4. Car tax.
Motorists should prepare for changes in car tax from April. For vehicles registered post-April 2017, the standard tax rate will increase by £5 to £195 annually. However, according to the RAC, the exact amount may vary if your vehicle was first used before 2017, with factors such as the registration year and fuel type influencing the final figure. A significant shift is the removal of tax exemption for electric vehicles (EVs).
Drivers of electric vehicles haven’t had to pay any tax on their cars for many years, but in 2025 that is set to change as several wide-sweeping tweaks come into force. As electric vehicle ownership has grown, changes to Vehicle Excise Duty – or VED – could affect thousands of drivers when they start to apply on April 1.
EVs registered from April 2025 will be subject to a nominal £10 tax in the first year, transitioning to the standard rate thereafter. This standard rate will also apply to EVs first registered after April 2017.
5. Broadband, phone and TV.
Tv licence fees are in the spotlight following Ofcom’s recent rule changes obliging telecoms providers to clearly communicate price hikes to customers – indicating “in pounds and pence” the precise increments and timing.
Alas, these alterations cater mostly to new contracts. Thus, subscribers to EE’s Sim-only deals post regulation will see an annual bump of £18, equating to £1.50 monthly.
Conversely, those who signed up prior to 10 April 2024 are staring down a 6.4% surge grounded in last December’s inflation, with an extra top-up tacked on. As for Virgin Media loyalists, standard broadband bills will inflate by 7.5%, except for the newcomers post-9 January this year, whose pockets will be lighter by an additional £3.50 each month. Not to be overshadowed, the TV licence fee isn’t spared either, ascending by a fiver to £174.50, or an extra £1.50 for black and white licences, reaching £58.50.
6. Stamp duty.
A shake-up beckons for the English and Northern Irish property market come April, as the threshold for duty-free purchases halves from above £250,000 to beyond £125,000. First-time homemakers have been riding high with zero stamp duty on abodes valued up to £425,000; though their joy will be clipped down to properties worth £300,000 thereafter. With the clock ticking, prospective buyers would be hard-pressed to seal deals before this regulatory recalibration.
7. Stealthy tax hikes.
The government has maintained the freeze on income tax and National Insurance thresholds until 2028, a policy inherited from its predecessor. This is often referred to as a stealth tax – it’s not explicitly labelled as a tax increase by the government.
However, due to a phenomenon known as “fiscal drag”, where wage increases result in more people paying higher tax rates, this policy effectively equates to a tax rise. The government’s financial watchdog predicts that by 2028-29, nearly four million additional individuals will be liable for income tax, with three million more moving into the higher tax bracket, as a result of the frozen threshold.