UK households face a significant financial recalibration in 2026, with a series of 22 confirmed changes set to impact budgets from January through to October. The adjustments span essential bills, taxes, wages, and benefits, affecting everyone from self-employed workers and drivers to mortgage holders and bill payers.
Major Bills and Household Costs Set to Rise
The new year brings immediate adjustments to several fixed costs. The Ofgem energy price cap will see a small increase of 28 pence per month for a typical dual-fuel household paying by direct debit between 1 January and 31 March 2026. This makes the annual cost £1,758, representing a 1% rise compared to the first quarter of 2025.
Come April, multiple household bills will climb. Council tax is set to rise by an average of five per cent across most English local authorities, the maximum permitted without a referendum. Several councils, including Birmingham and Bradford, have special permission for even larger increases.
Water bills, which saw the largest rise since privatisation in 2025, are expected to continue their upward trajectory in 2026/27 to fund infrastructure investments. Meanwhile, the BBC TV Licence fee is anticipated to rise again in April 2026, pending the outcome of a government consultation on the broadcaster's future funding. The current fee is frozen at £174.50 until the charter expires in 2027.
Tax Deadlines, Wages, and Benefit Reforms
Key administrative and payment dates are crucial for 2026. The deadline for online self-assessment tax returns for the 2024/25 tax year is 31 January 2026. Those who need to register for self-assessment for the first time must do so by 5 October 2026.
April also heralds changes to income and support. The National Living Wage will increase significantly, with the rate for over-21s rising by 50p to £12.71 per hour. An estimated 2.7 million workers will benefit from these rises.
In a major policy shift, the two-child benefit cap will be scrapped in April 2026. Chancellor Rachel Reeves confirmed the move, estimated to cost £3bn a year by 2029-30, stating the government did not believe in "punishing the most vulnerable children".
Benefits and the state pension will see above-inflation increases. Universal Credit will rise by an additional 2.3%, while the state pension will increase by 4.8% in line with the triple lock commitment, taking the full new state pension to £241.30 per week.
Further Changes Impacting Spending and Savings
A range of other financial modifications are scheduled throughout the year. Alcohol duty will rise in line with inflation (RPI) at 3.66% from February. Vehicle Excise Duty (car tax) will also increase by £5 for drivers paying the standard rate.
Not all support will continue, however. The Household Support Fund, which provides local authorities with money to help vulnerable residents, is currently funded only until 31 March 2026.
New regulations will also come into force. From 15 July 2026, stricter rules for Buy Now, Pay Later (BNPL) services will be implemented, requiring creditworthiness assessments and clearer pre-contract information. Furthermore, from April 2026, the tax relief for employees working from home on household costs will be cut.
Other notable changes include the expansion of free school meals eligibility in September, bringing in over half a million additional pupils, and the introduction of a new Vaping Products Duty from 1 October 2026.
These changes unfold against a backdrop of easing inflation, which was 3.2% in the year to November 2025, and expectations of further interest rate cuts by the Bank of England throughout 2026 to stimulate the economy.
