What’s going to happen to your household bills in 2026?

The cost of living crisis may appear in the headlines less frequently, but most families still feel the squeeze.

Inflation has fallen dramatically since its peak in 2022, but it is still more than 1% above the Bank of England’s 2% target.

The high cost of energy still remains a core problem in the UK, and other key bills like council tax and water also continue to increase higher than inflation every year.

A poll undertaken by Cost of Living Action (COLA) group with the Independent and Survation recently found that around 40% of Brits are left with less than £100 per month after essentials, while 13% have nothing or are forced into debt.

Almost 80% of respondents said the cost of living crisis had negatively affected their personal well-being, with many feeling gloomy about the next 12 months.

The poll would make for tough reading for Sir Keir Starmer’s government, which has made reducing the cost of living a central part of its plan to improve the lives of Brits and win over voters.

Against that backdrop, 2026 is shaping up to be a mixed year for household bills. Some costs are set to rise from April, while the government says other pressures should ease – particularly on energy.

Here, Yahoo News looks at which bills are likely to go up, or down, this year.

Energy bills

Energy bills are likely to come down this year, due to reforms announced by Rachel Reeves during the budget.

Households will see their energy bills cut by £150 a year on average starting from April.

This discount comes from the government scrapping the Energy Company Obligation scheme in March 2026, as well as reducing the amount households pay towards the Renewable Obligation scheme.

Both of these were extra charges added to energy bills to cover the costs energy companies paid to meet the government targets on household energy efficiency and renewable energies.

The poorest six million households will also benefit from a further £150 reduction due to the government’s extension of the Warm Home Discount to 2031, which was announced in January.

Energy companies distribute the discount by taking it directly off the bill of any household that qualifies, which is tied to the receipt of certain benefits.

These two combined policies will likely mean energy bills are lower in 2026 when compared to 2025 outside of any sudden shock to the international energy market.

Mortgage payments

It’s hard to predict where mortgages are going in 2026, with the best guess being that they will likely be slightly cheaper due to the downward trend of the Bank of England’s interest rate.

But this all depends on the interest rate paid by people locked into fixed-rate deals.

The Bank of England kept interest rates at 3.75% at its February meeting, but it was a close vote, with five members of the Monetary Policy Committee voting to keep them the same, while four voted to lower them.

The governor of the Bank of England, Andrew Bailey, said on 5 February there should be “scope” for further cuts later this year as the Bank believes it will meet it’s 2% inflation target sooner than expected.

But it also said he did not expect interest rates to fall back to the historically low levels seen in the 2010s and during the pandemic.

He said the low rates were a “product of exceptional things going on, starting with the financial crisis”.

This means that even though mortgage rates may be lower than they were in 2025, for anyone coming to the end of a five-year fixed deal this year, they are likely to face a heavy shock when they remortgage.

But rates have now been higher than their pandemic lows for several years, so someone coming to the end of a two-year fixed deal signed in 2024 may find their monthly mortgage payments decrease.

Council tax

Council tax increases are managed by local authorities, so increases are determined by where you live, but your council tax is effectively guaranteed to rise this year, most likely by 5%.

Councils with social care responsibilities are allowed to raise council tax by 4.99% (usually a 2.99% increase plus a 2% adult social care precept) but must ask for residents’ permission in a referendum before increasing it further.

But the government have allowed seven councils to raise their rates above this limit without a referendum in April.

Shropshire Council and Worcestershire County Council have been permitted to increase theirs by 9%, while Warrington Borough Council, Windsor and Maidenhead Borough and Trafford Council permitted to increase theirs by 7.5%.

Bournemouth, Christchurch and Poole Council in the south of England can raise its share by up to 6.75%.

Most councils in the country are facing financial difficulties and are expected to increase rates by the permitted 4.99%.

Water bills

Industry body Water UK says household water bills in England and Wales will rise by an average 5.4% from April 2026 – around £33 a year or £2.70 a month.

This has been mostly attributed to the need for water companies to vastly increase the amount they spend on infrastructure.

The increase varies from water company to water company, with Severn Trent increasing them by the most by 10% or £52 a year.

Households in Scotland are also expected to see a sharper increase, with bills increasing by £42 a year, according to Scottish Water.

Prescription charges

In England, the government has confirmed prescription charges will be frozen at £9.90 per item for 2026/27, with prepayment certificates also frozen.

In Scotland, Wales and Northern Ireland, prescriptions are free.

Car tax

Vehicle Excise Duty (VED), commonly known as car tax, is expected to rise in April, although this has not been confirmed by the government.

It has yet to announce the rates for this year, but for most cars it is currently £195 a year.

During the budget, the chancellor announced a new pay-per-mile road tax for electric cars, which will see them charged 3p per mile they drive.

Electric cars no longer qualify for free road tax, and in April 2026, electric vehicle drivers will start paying the standard rate.

This was announced to make up for lost money from the reduction in fuel duty, but it is not slated to come into force until 2028.