The financial landscape for 2026 presents a mixed picture for households across the UK. While inflation has retreated from its peak and mortgage rates are beginning to soften, the cost of essentials like housing, food, and energy remains stubbornly high compared to pre-pandemic levels. A series of scheduled changes throughout the year will directly impact personal budgets, with some offering relief and others adding further pressure.
Winter Adjustments: Energy, Inflation & Tax Deadlines
The year begins with a modest but symbolic increase in energy costs. On 1 January, the Ofgem energy price cap will rise by 0.2%. This adjustment will add approximately £3 to the typical annual dual-fuel bill for direct debit customers, taking it to £1,758. It is crucial to note that prepayment meter caps are lower, while those paying in arrears face a higher limit. Your actual bill will always depend on your consumption and specific tariff.
Also from 1 January, HM Revenue and Customs (HMRC) is tightening rules around cryptocurrency investments. Anyone buying, selling, or transferring cryptoassets like Bitcoin or NFTs will need to provide additional details, including their National Insurance number, to their provider to ensure all relevant taxes are declared and paid.
The key date of 31 January is the final deadline for submitting your self-assessment tax return for the 2024-25 tax year. HMRC reports that over a million people missed this deadline last year. This is also the date by which energy suppliers must offer tariffs with low standing charges, designed to assist low-energy users, though Ofgem warns these may come with higher unit rates.
Spring Shifts: Wages Rise as Bills and Duties Climb
February brings a hike in alcohol duty, which will increase by 3.66% in line with the Retail Price Index (RPI) on the 1st. The Wine and Spirit Trade Association estimates this will add 10p to a bottle of wine and 39p to a bottle of whisky.
Attention then turns to the Bank of England, with its first interest rate decision of the year on 5 February. The base rate concluded 2025 at 3.75%, and while future cuts are possible, Governor Andrew Bailey has indicated that subsequent decisions will be a "closer call." The second rate announcement is scheduled for 19 March.
A significant boost for workers arrives on 1 April, when the National Living Wage rises by 4.1%. This increase to £12.71 per hour for those aged 21 and over will boost a full-time worker's annual earnings by around £900. Younger workers and apprentices will also see their minimum wage rates increase.
However, April also sees several household bills climbing. The TV licence fee, linked to CPI inflation, will rise to just over £181. Water companies are expected to implement increases, with one provider signalling a potential 11% rise, and councils can raise council tax by up to 4.99%. On a positive note, prescription charges in England will be frozen at £9.90 per item, and energy bills are forecast to fall due to budget measures, potentially cutting the typical bill by £138 annually according to Cornwall Insight.
Tax Year Changes and Support Measures
The start of the new tax year on 6 April brings a suite of further changes. Income tax thresholds remain frozen, which may push some into higher brackets following pay rises. It also marks the final year under-65s can invest the full £20,000 allowance into cash ISAs.
Significant policy changes take effect, including the end of the two-child benefit cap, allowing families to claim support for more than two children. The state pension will rise, with the full new state pension reaching £241.30 per week. Meanwhile, inheritance tax reliefs are being trimmed, and dividend tax rates will increase for basic and higher-rate taxpayers.
The government's Household Support Fund, a vital lifeline for councils to help vulnerable residents, is currently due to end on 31 March, though it has been extended several times since its 2021 introduction.
With the Bank of England's third interest rate decision of the year due on 30 April, 2026 is set to be a year of careful financial calibration for both policymakers and the public.
