UK households face £208 increase from July | Personal Finance | Finance
Bills are expected to rise by £208 (Image: Getty)
Millions of households across the UK are expected to face a £208 annual rise in energy bills from July after the Chancellor warned the next energy price cap would return to levels seen last year.
Rachel Reeves told MPs that the new cap, due to be confirmed by Ofgem next week, is expected to be “at a similar level to the cap in April last year”. That would mean average annual household bills rising from the current £1,641 price cap set in April 2026 back towards the £1,849 level seen in April 2025, an increase of around £208.
Energy bills are expected to go up again (Image: Getty)
Speaking in the House of Commons, Reeves acknowledged families would feel the impact of rising costs.
“I know that any increase will be felt by families,” she said.
The Chancellor argued that measures announced in last year’s Budget, including a £150 reduction on energy bills, had softened the effect of rising wholesale prices.
She also said the Government was prepared to intervene again if market conditions deteriorate later this year.
“We stand ready to act if market conditions worsen significantly later this year,” Reeves told MPs, adding that contingency work was already under way on possible temporary support for households and businesses.
Alongside the warning on energy bills, Reeves announced a wider package of cost-of-living and industry support measures.
The Government will introduce a 10p-per-mile increase in tax-free mileage rates, backdated to April 2026, benefiting workers who drive for their jobs, including carers, tradespeople and community staff.
A 12-month road tax holiday for heavy goods vehicles (HGVs) was also confirmed, with ministers saying it could save operators of large lorries up to £912.
Reeves additionally announced a temporary cut of more than a third to red diesel duty until the end of the year to support farmers and the rail freight sector.
The Chancellor said the support package would be partly funded through changes to the taxation of oil and gas firms operating overseas.
She accused some companies of structuring their affairs to avoid paying corporation tax on UK energy trading profits.
“Today we are putting an end to that practice,” Reeves said, adding the reforms were expected to raise “hundreds of millions of pounds a year”.
The Government also unveiled a £350 million “critical chemicals resilience fund” aimed at supporting strategically important manufacturers, alongside a £120 million package to help Britain’s historic ceramics industry improve efficiency and cut energy costs.
The latest energy cap announcement comes as many households continue to struggle with living costs despite inflation easing in recent months.
