9 key financial changes in 2026: energy bills, pension changes and more
A look at the good, the bad and the ugly money changes affecting your cash in 2026.
The new year will bring a number of big financial changes that could dent your wallet or boost your income.
Here’s what you need to know and what you can do to grab any extra cash over the course of 2026.
1. State Pension up by 4.8%
Retirees are in for another big increase to their State Pension payments next year, thanks to the triple lock.
Those on the full New State Pension will see their weekly income rise by 4.8% in April, boosting annual incomes from £12,016 to £12,547.
For those on an old Basic State Pension, pension incomes will rise from £9,175 to £9,614.
2. Average Council Tax bill to rise £114
Another year, another round of swingeing Council Tax hikes – you can read why we think it's on an unsustainable path here.
While most councils will announce their exact increases early in 2026, we do know that most are likely to hike theirs by around 5% in April.
With the average Band D Council Tax bill currently standing at £2,280, this would result in an annual hike of £114.
3. Energy bills to fall
Although the year will start with a very modest 0.2% increase to the Energy Price Cap on January 1, energy bills are expected to be cheaper in 2026 compared to this year.
This is largely thanks to the fact that prices are expected to fall by an average of £150 from April.
During her Budget speech last month, Chancellor Rachel Reeves announced that households will be exempt from certain green levies, helping reduce energy bills across the UK.
If your energy usage is particularly high, your savings should be higher than that figure, while those with below-average bills will save less.
4. Retirement age rising to 67
We’ll see a gradual increase in the retirement age starting next year.
Between April 2026 and 2028, it will increase in stages from the current 66 years old to 67.
It will remain at this level until 2046, when it will again be hiked to 68.
5. Petrol and diesel taxes to rise
When wholesale oil prices were soaring in 2022, the Government announced a temporary 5p reduction to Fuel Duty.
This will be gradually phased out between September 2026 and March 2027.
Once fully reintroduced, this will add roughly £3 to the cost of filling up your tank.
6. Big boost for larger families
At present, Child Benefit is only paid to the first two children that parents have.
However, this two-child limit will be removed from April 2026.
It will be a huge boon for those with especially large families: official figures suggest it will be worth more than £14,000 a year to each of the 18,000 low-income families who have at least six children.
7. Pay rise for those on minimum wage
Millions of the lowest-paid workers will see their pay packets increase sharply from April.
Following changes announced in the Budget, the minimum wage for workers aged under 21 will rise by 8.5% to £10.85 an hour.
For workers aged 21 and over, there will be a smaller increase of 4.1%, taking the minimum pay to £12.71 an hour.
8. Water bills to rise faster than expected
Back in 2024, the water regulator, Ofwat, gave suppliers permission to hike bills by an average of £19 per year up until 2030.
These hikes would be painful enough, but things have gotten even worse for millions of households.
That’s because Numerous water companies challenged Ofwat’s decision, saying they wanted to hike bills even further.
Having taken the case to the Competition and Markets Authority, the five water companies – Anglian, Northumbrian, Southern, Wessex and South East – can now do just that.
Prices will now rise by an extra 1% to 5%, depending on which supplier you’re with.
9. Flying to be taxed more heavily
Flying anywhere will get more expensive from April as sharp hikes to Air Passenger Duty kick in.
It will add £2 to each short-haul flight, while long-haul journeys will attract up to £14 more tax per ticket.
To put that into context, a family of four planning a holiday to the United States will have to hand over an extra £64 in flight taxes.
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