A series of tax, benefit and bill changes took effect in April 2025, according to an analysis published by the Resolution Foundation on 3 April 20251. The think tank said April "brings with it a series of tax, benefit and bill rises"1.
The combined effect of the freeze to personal tax thresholds and the increase in employer National Insurance is an estimated income loss of around £170 in 2025-26 for a typical household, compared with a world of no tax rises1. Council Tax rises reduce typical household income by £80 a year in cash terms, with increases of 5 per cent across most of England, similar in Northern Ireland, 7 per cent in Wales and 9 per cent in Scotland1. The Resolution Foundation said this continues a trend of Council Tax rising faster than inflation, taking the revenue to its highest ever share of GDP outside the pandemic1.
The annualised energy price cap rose by £111 in April 2025, the first time energy prices have pushed up inflation since the third quarter of 20231. For most households in England and Wales, the largest bill change came from water companies, with an average rise of 26 per cent, or around £120 a year, and as high as 47 per cent for Southern Water customers1.
Most non-pensioner benefits rose by 1.7 per cent, adding £80 a year to basic single adult support, which the Resolution Foundation said is considerably less than expected inflation of 3.2 per cent in 2025-26, meaning the real value of that social security income falls this year1. Local Housing Allowance remains frozen; the think tank said a continued link to rents would have meant a typical 9 per cent boost, or an average of around £800 a year for two-bedroom properties1.
| Change from April 2025 | Figure |
|---|---|
| Typical household income loss from threshold freeze and employer NI rise | around £170 in 2025-261 |
| Typical household income fall from Council Tax | £80 a year in cash terms1 |
| Council Tax rise: most of England / Northern Ireland / Wales / Scotland | 5 per cent / similar / 7 per cent / 9 per cent1 |
| Annualised energy price cap rise | £1111 |
| Average water bill rise in England and Wales | 26 per cent, around £120 a year1 |
| Non-pensioner benefit uprating | 1.7 per cent1 |
| Expected inflation in 2025-26 | 3.2 per cent1 |
"Altogether, incorporating the broader outlook for inflation, earnings and housing costs, the real median non-pensioner household income is projected to fall by 1 per cent (or around £400) in 2025-26, while the income of the poorer half may fall by 2 per cent."
Why it matters for households
The changes apply from April 2025 and affect household budgets through tax, Council Tax, energy, water and benefit income. Because most non-pensioner benefits rose by 1.7 per cent while expected inflation is 3.2 per cent, the real value of that income falls over 2025-261. The frozen Local Housing Allowance means private renters receiving it do not see support track rents1. The Resolution Foundation projects real median non-pensioner household income falling by 1 per cent, or around £400, in 2025-26, with the income of the poorer half possibly falling by 2 per cent1. The freeze to personal tax thresholds means more of a pay rise is drawn into tax as wages rise1.
What happens next
The Spring Statement in the week before publication committed to an above-inflation increase of around 2 per cent in the standard allowance of Universal Credit from April 20261. The Resolution Foundation said that should be brought forward to October 2025, at a one-off cost of around £400 million1. It also called for a change of course on the Local Housing Allowance freeze and the two-child limit1.
Sources1 cited
- Happy new tax year 2025 • Resolution Foundation resolutionfoundation.org
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