Whether you’re employed, out of work, a student, carer or pensioner, there are changes coming that will affect your finances in 2025.
Let’s run through the main things that are happening and when, so you can prepare for the year ahead.
Every three months, the energy regulator Ofgem reviews the price cap. They have announced that it’s due to go up by 1.2% to £1,738 per year for the period of January to March 2025. That’s about an extra £21 a year for the average household.
It’s important to know that the price cap is the maximum rate per unit of energy and standing charge that can be billed. It isn’t the maximum that you can be billed per year – the total amount you are charged depends on how much energy you use.
Tip: Tim Jarvis, director general of markets at Ofgem, recommends that “Anyone struggling with bills should speak to their supplier to make sure they’re getting the help they need and look around to make sure they’re on the best, most affordable deal for them.”
The cap on single bus fares will go up from £2 to £3 on 1st January for all routes included in the scheme.
If you live in London or Manchester, then these changes won’t affect you. Single bus fare caps will stay at £1.75 in London and £2 in Manchester.
Premium Bonds are a type of savings account. Instead of earning interest, bondholders are entered into a monthly prize draw with the chance to win tax-free prizes from £25 to £1 million.
Although the odds of winning will stay the same (at 22,000 to 1), a drop in the prize funds rate to 4% means there will be fewer big prizes and more small prizes handed out from January.
For example, National Savings and Investments (NS&I) say there’ll be 82 winners of £100,000 in January 2025, which is down by seven compared to November 2024.
Meanwhile, the number of £25 winners is going up from 1.5 million to 1.8 million over the same timeframe.
Let’s start with the good news. On 1st February, the cost of alcoholic drinks served from draught will go down by 1.7%. This means “a penny off a pint in the pub” according to Chancellor of the Exchequer, Rachel Reeves.
But the price of non-draught alcoholic drinks like bottled beer, cider, wine and spirits will go up by RPI (retail price inflation). This is due to a rise in Alcohol Duty.
From 2nd March 2025, the cost of most railcards will go up by £5. And train fares regulated by the government will increase by up to 4.9%.
Regulated train fares account for almost half of fares and include:
For example, an annual season ticket from Brighton to London Terminals currently costs £5,616. If this goes up by the full 4.9%, then the new price will be £5,891, which is £275 more a year.
If you’re looking to buy a new place to live this year, it could cost more after 31st March when the Stamp Duty holiday is due to end.
The Stamp Duty thresholds will go back to their previous levels of £125,000 for homebuyers and £300,000 for first-time buyers (down from £250,000 and £425,000).
This means more tax will be payable, as Stamp Duty is due on any amounts over these lower thresholds.
April marks the start of the new financial year, with many changes expected. Let's take a look.
There is some positive news. The National Minimum Wage and the National Living Wage are both set to increase from 1st April 2025.
People claiming Universal Credit will see an uplift in their payments from next April. Here are the new amounts:
The State Pension is rising by 4.1%. Let’s see what that means in terms of money in your pocket:
If you are an unpaid carer, you will be able to earn £196 a week (that’s an extra £45) from 7th April 2025, without it affecting your Carer’s Allowance. That’s equivalent to 16 hours at the National Living Wage.
Plus, your allowance will rise by 1.7% - from £81.90 to £83.29 a week.
Water bills are predicted to go up by £31 a year on average over the next five years. The exact amount varies between water companies.
Tip: If you're worried about how to pay your water bill, we recommend contacting your water company to check what they do to help. For example, they may be able to offer reduced charges (known as ‘social tariffs’) or a debt support scheme.
Councils will be able to increase council tax by a maximum of 4.99% in 2025, which could work out at more than £100 a year on average.
Technically, councils can increase rates by 5% or more, but they would need to hold a referendum or get permission from the government first.
Tip: It may be worth checking with your local council to see if you qualify for a scheme to reduce your bill, such as:
If you’re looking to buy your first home in 2025, it may be useful to know that the Mortgage Guarantee Scheme is coming to a close on 30th June.
This scheme helps first-time buyers to purchase a property worth up to £600,000 with a 5% mortgage (subject to affordability checks).
There are other government schemes available to help people get on the housing ladder. We recommend that you speak with a qualified mortgage adviser to find the best option to suit your individual circumstances.
The current cap on tuition fees in England is £9,250 which has been in place since 2017. This cap will increase in the next academic year to £9,535 for standard full-time courses.
However, it’s worth noting that this won’t impact how much you pay back each year as that depends on how much you earn, not how big your loan is.
At the moment, eligible working parents can get:
From September 2025, the government-funded scheme will expand further. Eligible working parents will be able to access:
These hours can be used over 38 weeks of the year during school term time. Or you can spread them out over the whole year, but this will mean fewer funded hours per week.
If you’re struggling to make ends meet, you’re not alone. Find out what support is available to help with the cost of living.
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.
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