Developments to personal finance in 2023
2023 brought a run of significant changes that reshaped how households across the UK planned their finances. This is a look back at what happened that year, kept as a record of the moment. Some of the figures below have since moved on, so we have added a short Where things stand now (2026/27) section at the end to bring you up to date.
JANUARY:
Expiration of stamps
This one sneaked in. Beginning on January 31, anyone possessing non-barcoded stamps will discover they are ineligible for use. You may still use your stamps until July 31 due to a six-month grace period instituted by the Royal Mail. It implies that you must either use up the stamps or exchange them for fresh ones. After the grace period, everything sent out with an outdated stamp will be deemed to have inadequate postage.
MARCH:
UK rail fare increases
Normally, the UK mainline rail fares increase in January. This year the government postponed the hike until March 5 due the current other economic pressures. However, subsequent ticket increases will be enormous relative to past trends, totalling 5.9%. The government announced a fare increase soon before Christmas that affects half of all tickets, including season passes. There is a chance that unregulated fares will increase much higher!!
As for TFL, there's no safety ground in London either. Sadiq Khan announced that from March, TFL will be increasing their transport for London fares across all services. The increase will be a similar proportion as the rest of the UK, as much as 6%.
Help to Buy Final Completions
Time is running out, with no announcement as of yet to extend the scheme. If you had previously applied for help to buy and been accepted by the closing date of 31st October 2022, you now have until 31st March to complete. Time to get on the phone to your conveyancers. There's no telling how any late-comers will be treated but it's certainly not a position you will want to be in.
APRIL:
Reduced income tax threshold
With the start of the new tax year, the threshold at which individuals pay the highest rate of income tax (45%) will drop from £150,000 to £125,140. A person making £150,000 per year would now have to pay over £1,250 more in taxes annually as a result of the change.
Additionally, the basic and higher rates of income tax have been frozen once more, which means that people will pay more in taxes than they would have if the thresholds had increased as normal in line with inflation. It implies that everyone who receives a wage raise may face a higher tax rate in addition to the possibility of losing certain benefits, such as child benefit or personal allowance.
Reduced tax-free allowances
The new tax year will also bring a tax crackdown on investors, as the tax-free amounts for capital gains and dividends will be cut. It means the amount of dividend income you can receive before paying tax will be reduced from £2,000 to £1,000, costing a higher-rate taxpayer up to £338 more in tax. Meanwhile, the tax-free amount for capital gains will be chopped from £12,300 to £6,000, costing a higher rate taxpayer up to £1,260 a year more for non-property gains.
Ahead of the deadline it’s a good idea to move money into an ISA (or pension) if you have sufficient ISA allowance remaining. Alternatively, you could transfer assets to your spouse to use their allowances.
Council tax is going up
Local councils may now hike council tax by up to 5% without calling a referendum thanks to changes made by the government. The fact that many local councils are having financial difficulties means that many people may experience rises in their council tax bills up to this cap. The average Band D house in the UK will pay £2,064 in council tax year if rates rise by 5%; this is an increase of approximately £100 over 2022's costs.
Energy bills will rise, again
The current iteration of the Government’s Energy Price Guarantee ends in April. It will be continued but the cap will be placed at a higher level, meaning that the average household energy bill for electricity and gas will rise from £2,500 a year up to £3,000 a year – although in reality lots of people will pay far more if their energy use is above average.
On top of this, the Government hasn’t said if it will be providing the universal £400 off energy bills that it handed out to every household in 2022 and if it is repeating the £150 council tax rebate. This means that the average household could face an extra £1,050 a year in energy costs from April.
Now, some April good news…
Increases in state pension (and other benefits)
Starting in April, everyone receiving a state pension will get payments that are 10.1% higher. As a result, the basic state pension, provided to people who reached state pension age before to April 6, 2016, would grow to more than £8,000 per year, and the full flat-rate state pension will climb to over £10,000 per year for the first time.
Additionally, the child benefit and universal credit will also increase by the same amount.
Tax Year End
5th April is the tax year deadline. Be sure to use your ISA savings allowance by this date. It's 'use it, or lose it'. As interest rates slowly increase, you can expect to see a higher return on your savings. Unfortunately, for some people, your personal savings allowance could be as little as £500. That means any interest you earn above your relevant tax bracket will be taxable at your income tax rate. Tax-free savings (ISAs) are gaining momentum again, don't lose 40% of your interest to HMRC.
Quarter 2 of 2023:
New cost of living adjustments start
Similar to 2022, some individuals will get handouts to help with living expenses, with the first payments starting in the spring. Those receiving some means-tested benefits, such as Pension Credit and Universal Credit, will get £301.00 in the spring, £300.00 in autumn, and then £299.00 in the spring of 2024.
This summer, recipients of incapacity benefits will receive a £150.00 handout, while pensioners will receive an extra £300.00 in their winter fuel payments (or in early 2024). Closer to the time, the precise payment windows and their associated qualifying periods will be disclosed.
What else to look out for in 2023
Inflation
Inflation is expected to continue to rise. That could not only make your weekly shop more expensive, but the figures are used across the year to calculate changes to benefits. Changes to benefit amounts are determined by the inflation figures, impacting benefits suc as, tax-credits and the state pension.
At some point, due to the nature of the calculation, inflation stats will drop off a cliff. It will be interesting to see when this finally does happen, and its impact on interest rates.
Interest rates
The Bank of England's inflation target is 2%, overnight the figures could drop. Should this happen, will the BOE leave interest rates unchanged so they can wean off quantitative easing? It will be at a consequence to house prices as eventually, interest rates will catch up with all borrowers. Many homeowners will be choosing to downsize. The housing market could see a drop in prices.
The Bank of England's monetary policy committee meets roughly every 6 weeks to vote on interest rate changes.
Overall, 2023 brought a mix of positives and pressures, but it was a journey households went on together.
Where things stand now (2026/27)
A lot has changed since this article was written. Here is where some of the key numbers sit today:
- Income tax thresholds remain frozen. The Personal Allowance is £12,570 and the additional rate (45%) starts at £125,140. From April 2027, tax on savings interest is set to rise by 2 percentage points at each band.
- Dividend allowance has fallen further, to just £500, and dividend tax rates rose by 2 percentage points from April 2026.
- The capital gains tax-free allowance is now £3,000 (down from £6,000 in 2023/24). Gains above the allowance are taxed at 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers across most assets. Read more on inflation and how frozen allowances quietly raise the tax you pay.
- The ISA allowance stays at £20,000. From April 2027, the cash ISA limit is due to fall to £12,000 for under-65s, so the stocks and shares side becomes more important. See our guide to your ISA allowance.
- The State Pension rose again under the triple lock. The full new State Pension is now £241.30 a week (around £12,548 a year). Our explainer on the triple lock covers how the increases are calculated.
- The pension lifetime allowance was abolished from April 2024, and the annual allowance is £60,000 for most people. See what happened to pension limits.
This insight is general information and not personal financial advice.
