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In July 2025, millions of UK households are confronting a sharp rise in essential living expenses. On average, bills have surged by £123 per month, driven by increased charges on water, energy, council tax, telecom services, and vehicle-related fees.
This inflationary wave is putting considerable strain on families, prompting experts to dub this period “Awful July.”
Below, we break down what’s contributing to the increases and what practical steps you can take to ease the burden.
Breakdown of Cost Increases
| Category | Average Annual Increase | Key Details |
|---|---|---|
| Water Bills | £123 | 26% rise due to £104bn infrastructure overhaul by water companies |
| Energy Bills | £111 | Price cap raised by Ofgem to £1,849 per year |
| Council Tax | £109 | 4.99% hike – Band D now pays approx. £2,280 annually |
| Telecom Services | £15.90–£48 | CPI + 3.9% mid-contract hikes on broadband and phone services |
| Vehicle/TV Costs | £20–£50 | Higher vehicle tax, new EV taxation, TV licence up to £173.50 |
| Total Impact | ~£400/year | Roughly £123/month pressure on the average household budget |
Water Bills: Infrastructure Comes at a Cost
Water bills are up by £123/year, largely due to a £104 billion investment program to modernize infrastructure, reduce leaks, and cut sewage discharges.
- Southern Water customers face the steepest hike — 47% increase, now averaging £703/year.
- Smart solution: Install a water meter if you use less water than average.
Energy Bills: Still Tied to Gas
Despite the UK’s growing reliance on renewables, Ofgem’s 6.4% hike in the energy cap has pushed the average dual-fuel bill to £1,849/year.
- Hidden surcharge: Around £50 per household annually due to energy theft.
- Smart tips:
- Use a smart thermostat
- Turn off appliances on standby
- Switch suppliers if you’re out of contract
Council Tax: Up Again
Council tax saw a 4.99% increase across most local authorities, pushing Band D properties to £2,280/year.
- Some councils in financial distress have hiked even more.
- Discount tip: Live alone? Claim a 25% discount. Students and benefit recipients may qualify for exemptions.
Telecom Services: Contracted Costs Climb
Mid-contract increases from inflation-linked clauses (CPI + 3.9%) have added £15.90 to £48 annually to telecom bills.
- Switch tip: If your contract has ended, you can often negotiate better deals or move to a social tariff for as low as £15/month.
Vehicle & TV Costs: Hidden Hikes
- Vehicle tax (VED): Increased by £10–£20 depending on your car
- Electric vehicles: Now taxed for the first time
- TV licence: Up £10.50, now £173.50/year
Cost hack: Pay TV and car tax in one annual payment to avoid interest or admin fees.
Smart Ways to Manage Rising Costs
1. Review & Restructure Your Budget
- Use budgeting tools like YNAB or Emma
- Cancel unused subscriptions
2. Compare and Switch Providers
- Use tools like Uswitch, MoneySuperMarket, or Compare the Market
3. Apply for Support Schemes
- Warm Home Discount
- WaterSure Scheme
- Council Tax Support
- Broadband Social Tariffs
4. Invest in Energy Efficiency
- Install insulation, use LED lighting, and monitor consumption via smart meters
The £123/month spike in household bills is a significant challenge for UK families, but it doesn’t have to break the bank.
By understanding where the increases are coming from and taking practical actions—like switching providers, applying for discounts, and reducing energy usage—you can protect your finances and stay one step ahead.
Now is the time to take control, cut unnecessary costs, and make your household more resilient.
FAQs
Why have water bills increased so much in 2025?
Water companies are funding a £104 billion infrastructure upgrade, leading to average bill increases of £123/year.
Are electric vehicles now taxed in the UK?
Yes, electric vehicles are taxed for the first time in 2025, contributing to increased vehicle-related costs.
How can I reduce my telecom bill amid price hikes?
If you’re out of contract, switch providers or request a better deal. Also, look into social tariffs for lower rates.