BUDGET 2025: What does it mean for workers and household bills?

This year’s budget announcement was hotly anticipated and affected household budgets across the board.

Here’s a round up of how it affects workers, students and your household bills.

Workers

This year’s budget was a mixed bag for workers.

Positive news came in the form of a boost to the minimum wage, which will increase 4.1% to £12.71 for workers aged 21 and over.

Challenges may arise for workers across the board, however, with income tax thresholds being frozen until 2031.

That’s 3 years longer than previously planned.

This means that if you get a pay rise, it could drag you into a higher tax bracket. Or, a larger portion of your income might be taxed. This is known as fiscal drag.

You can estimate how much extra tax you’re paying due to frozen thresholds using our fiscal drag calculator.

The table shows income tax levels for England, Wales and Northern Ireland.  (Scotland uses a different income tax system.)

Household bills

A range of measures directly affecting household bills were also announced.

Energy bills: energy bills are expected to fall due to the government scrapping the Energy Company Obligation. This is estimated to save all households around £150 on energy bills. 

Rail fares: rail fares are frozen for the first time in 30 years, which could help commuters save. 

Prescriptions:  single NHS prescriptions are being frozen at £9.90. Three month and annual prescriptions prepayment certificates will also be frozen for 2026/27 – helping those on repeat prescriptions save. 

Electric vehicles: a new duty for electric cars will be introduced alongside vehicle excise duty costing 3p per mile for electric cars and 1.5p for plug-in hybrids. 

High-value home council tax: a council tax surcharge will apply to homes worth over £2m. There will be four price bands with the surcharge with the lowest at £2m-£2.5m – £2,500 rising up to £7,500 for homes valued at £5m or more.

What can you do?

Creating an effective budget to manage your own finances is crucial for managing your money.

There are lots of tools available to help create and manage a budget effectively.

For instance, budgeting apps are a great way to track your expenses, find ways to cut costs and set spending limits.

Most banks now offer budgeting tools online or via their app too, which can also help customers manage your money effectively.