Why the Start of the New Tax Year is Key for Your Budget
Your monthly budget is the cornerstone of your financial plan. By tracking all your income and outgoings, you can control your spending and ensure you’re able to make regular contributions to savings and investments for the future.
It’s important to regularly review your budget as your expenses change because, if they increase, you might need to reduce contributions to your savings unless you find areas to cut back elsewhere. Alternatively, if your income increases or certain bills fall, you might be able to save a little more.
If you don’t check your budget from time to time, your outgoings could creep up without you realising it, making it more difficult to work towards your goals. You might miss opportunities to save more and grow your wealth faster too.
Here are four reasons why the start of the new tax year could be a useful time to review your budget.
- Council Tax has increased for households across the country
- Your utility bills could change
- Broadband and mobile providers may introduce price rises
- You may want to plan contributions to savings for the future
Council Tax has increased for households across the country
Even though the government increased the amount of money it gives to local authorities for the 2025/26 tax year, many households will face increased Council Tax bills.
The amount by which councils can increase taxes is limited by the government. In England, councils with responsibility for delivering social care can increase bills by up to 4.99% without triggering a referendum. Smaller councils that do not provide social care are typically limited to a 2.99% increase.
Almost all English councils have increased their Council Tax bills by the maximum amount allowed. Certain local authorities have also been given permission to increase bills beyond these limits so you could see a significant rise in your Council Tax at the start of the tax year.
You should have received a letter from the council outlining your upcoming payments for the year. If you haven’t, you can use this page on the UK government website to check what Council Tax band your home is in. Once you have this information, you can check your local authority’s website to see how much households in your tax band will pay.
It’s also worth noting that if you live alone or others in your home are discounted (if they’re under 18 or a full-time student, for example) you might be eligible for a Council Tax reduction. Check the Citizen’s Advice Bureau for more information on reductions and exemptions you could apply for.
Your utility bills could change
Energy costs have increased significantly in the past few years, and you may have noticed a rise in your own bills. While energy prices fell slightly at the end of 2024, they could increase again because the energy price cap changed on 1 April 2025.
The energy price cap puts a limit on the amount suppliers can charge for a single unit of electricity or gas, as well as daily standing charges.
According to Ofgem, the new cap, which will remain in effect until 30 June 2025, means that the maximum amount a typical household – using 11,500 kWh of gas and 2,700 kWh of electricity a year and paying by direct debit – can pay for energy is £1,849 a year.
This is an increase of 6.4% compared with the previous price cap that was in place from 1 January to 31 March 2025. As a result, unless you have a fixed-price tariff, you may see your energy bills rise again.
It’s also important to bear in mind that the price cap is a limit on the cost of each unit of energy, not the total amount you could pay. So, if your energy usage is above average, you could pay more than £1,849 a year.
If you’re concerned about how much you’re paying for energy, you may consider switching to a different provider. Using energy comparison sites will help you find all the available deals, so you can get the lowest price.
You could also fix your energy price for a set period (usually a year) to protect yourself against further price rises. However, if prices fall again, you may not be able to benefit from lower energy costs until your fixed-term contract ends and you can move to a new tariff.
Broadband and mobile providers may rise prices
Many broadband and mobile providers introduce price increases partway through your contract, normally in April, at the start of a new tax year. The amount that your bill will increase by depends on the provider, with some companies not raising prices at all.
Providers often increase bills in line with the rate of inflation, plus an additional percentage. For example, according to Uswitch, numerous companies increased their prices by 6.4% – the rate of inflation plus an extra 3.9%. However, Virgin Media and Onestream introduced larger price increases of 7.5% for most customers.
Unfortunately, these incremental price rises can go unnoticed, and your outgoings slowly creep up over the years, making a notable difference to your budget.
Fortunately, you may be able to contact your provider and renegotiate your contract to find a cheaper price. Alternatively, you could switch to a new provider that offers a lower rate.
Why you should plan your pension contributions
You may want to plan contributions to savings for the future
Reviewing your budget can help you manage price increases and keep track of your outgoings. Ultimately, this means you have more control over your wealth and ensures that you have enough disposable income to contribute to your savings and investments.
The beginning of a new tax year could be an excellent time to start planning contributions to your savings because certain allowances reset.
This includes your ISA allowance of £20,000 in 2025/26. This is the total amount you can pay in across all your ISAs. You could invest through a Stocks and Shares ISA without paying Capital Gains Tax (CGT) or Dividend Tax on investment returns. Alternatively, a Cash ISA allows you to save without paying Income Tax on your interest.
Your pension Annual Allowance – the total amount you can contribute to your pensions each year without triggering an additional tax charge – also resets. In 2025/26, this stands at £60,000 (or 100% of your earnings, whichever is lower). You can also utilise carry forward, which allows you to use any unused annual allowance from the previous three tax years to contribute more to your pension in the current year.
Using as much of these allowances as possible could help you save and invest tax-efficiently and build more wealth (our recent article on tax allowances and exemptions has more information on this).
That’s why you might want to review your budget and consider how much you can comfortably afford to save each month. If certain bills have increased, you might find other areas where you can cut back so you can maintain your contributions to savings and investments.
On the other hand, you might find that you have extra room in your budget, so you could save more and work towards achieving your goals faster.
Reviewing your budget in this way could allow you to spread contributions throughout the year and make good use of all the available allowances.
Get in touch
We can help you explore ways to regularly save and invest for the future.
Email hello@fcadvice.co.uk or call 0333 241 9900.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.