It’s the start of a new financial year, but as changes from the 2025 Budget finally start taking shape, will it feel like a fresh start for everyone? We’re here to break down how much the minimum wage has gone up in the UK (and for who), as well as what the continued freeze on income tax bands means for your pocket, and some useful tips that can help you boost your income for free.
How Much Has the UK Minimum Wage Gone Up?
Here’s a full breakdown of the new minimum wage depending on your age group:
- 16 & 17 Year-Olds/Apprentices: Up by 6% from £7.55 per hour (p/h) to £8 p/h.
- 18-20 Year-Olds: Up by 8.5% from £10 p/h to £10.85 p/h.
- 21 & Over: Up 4.1% from £12.21 p/h to £12.71 p/h (an increase of around £900 per year for a full-time employee).
What Does the Continued Freeze on Income Tax Bands Mean?
Income tax bands have been frozen since 2019, and although these bands were due to start rising from April 2028, Rachel Reeves confirmed in her 2025 Budget that they would stay like this until April 2031. This also includes National Insurance thresholds.
What is Income Tax & National Insurance?
Income tax is a tax you pay on your earnings (this usually covers wages, self-employment profits, dividends and rental property income), which is used by the government to fund public services like healthcare (the NHS) and education. Most people get a tax-free Personal Allowance (tax band), which means you only pay tax on any income that goes over this threshold.
National Insurance is also a tax you pay on your earnings from employment or self-employment, paid by those aged 16+ and earning above certain thresholds. This is used to help fund state benefits and build your entitlement to the State Pension.
So what does this long-term freeze mean for your pocket? Well, it basically means that even though minimum wage has gone up, you could end up paying a bigger portion of your income in tax.
According to the Office for Budget Responsibility (OBR), this continued freeze means 780,000 people will start paying income tax while 924,000 more people will be pushed into higher tax bands, as wages gradually rise over time while tax thresholds are frozen.
What Can I Do to Help Boost My Income?
If, like many others, you’re feeling the pinch from the UK’s rising cost of living, we’ve rounded up some useful tips to help you boost your income.
- Sell Unwanted Items for Free Online: eBay, Vinted and Facebook Marketplace are great places to start. You’d also be surprised at the items people are willing to pay for, such as ‘tech leftovers’ (e.g. empty smartphone boxes, gaming instruction manuals, specific remote controls/cables, etc.). If you prefer the in-person selling experience, why not try a car boot sale?
- Rent Your Spare Room: If you have the space and you wouldn’t mind taking in a lodger, you can rent out a spare room in your home or take short-term guests via Airbnb and earn up to £7,500 per year tax-free through the Government’s ‘Rent a Room’ scheme.
- Review Your Bank Account: We know it can take some effort to uproot the bank account you’ve had for years, but staying in the same rut can mean missing out on valuable interest! Contact your bank to ask which of their current and/or savings accounts is best and how to switch over to it, or look into switching to a different bank altogether if they offer better rates (they also tend to offer between £175 and £250 as an incentive for joining!).
- Have a Subscription Audit: Another one that takes a bit of effort, but is definitely worth it – cutting just one or two unused subscriptions can save you £10-30 per month! Just sit down, go through all the subscriptions you pay for (e.g. Netflix, Amazon Prime, Hello Fresh, etc.) and cancel the ones you don’t actually use. Also, if you’re struggling with surprise renewals, from Spring 2027, new laws (including 14-day ‘cooling-off’ periods) will make cancellations easier and refunds fairer.
- Check Which Benefits You’re Entitled to: Several state benefit payments are going up this year, and you could be missing out on the help you’re entitled to. Use our free benefits calculator to check in just a few minutes.
Don’t Miss Out on Tax-Free Support
Staying on the topic of state benefits, we’ve broken down which payments are increasing from this month (April 2026), as well as several tax-free schemes that may provide some much-needed income support for you.
Which UK State Benefit Payments Are Increasing in April 2026?
- Universal Credit (including the child element)
- Carer’s Allowance
- Personal Independence Payment (PIP)
- Disability Living Allowance
Tax-Free Government Schemes to Boost/Support Your Income
- 30 Hours of Tax-Free Childcare
- Individual Savings Accounts (ISAs) – Important: From April 2027, you will only be able to save up to £12,000 tax-free per year in a Cash ISA if you’re under 65. At the moment, you can save a maximum of £20,000.
- National Savings and Investments (NS&I) or Premium Bonds
Is the Rising Cost of Living Pushing You Further into Debt?
If the rising cost of living is pushing you further into debt, you’re not alone. According to Citizens Advice, one in three (35%) people trapped in problem debt have been unable to buy essentials (i.e. food) in the last six months.
Don’t be afraid to reach out and get the help you need. Our friendly and approachable debt advisors offer free*, confidential debt advice, and you don’t have to speak to us on the phone initially if you don’t want to. Our team is also available to chat over email, through WhatsApp, or in a webchat.
Alternatively, try our free online debt advice tool to get debt advice in just 10-15 minutes. Available all day and all night, simply fill in some details and you’ll get debt advice specific to your situation and a full breakdown of which debt solutions you qualify for on-screen, instantly.
*Our advice is free, but if you sign up for a debt solution, a fee will apply for some solutions.
