London Tube Fares Surge by Up to 7.1%?! New ISA Savings Account for First-Time Buyers to Launch; Small Employer Relief Rate to Increase
- TBA
- 4 days ago
- 5 min read
London Underground prices are going up, some ticket types increase by up to 7.1%
From 1 March, London Underground fares have increased again, with some ticket types rising by as much as 7.1%. Peak fares in Zone 1 have seen particularly noticeable increases.
Under the new changes, a peak single fare in Zone 1 has risen from £2.90 to £3.10, while the off-peak fare has increased from £2.80 to £3.00.
At the same time, National Rail fares across the country will be frozen to help ease cost of living pressures. However, London Underground fares will not be subject to a similar cap. London Mayor Sadiq Khan said the fare increase was one of the conditions attached to the government’s funding support for major Transport for London (TfL) infrastructure projects, a requirement stemming from last year’s public spending review.
Fare Changes on Selected Routes
This increase forms part of the annual fare adjustment. In recent years, London Underground fare rises have generally outpaced inflation.
Examples of the latest increases include:
Tottenham Court Road (Zone 1) to Edgware (Zone 5): from £3.60 to £3.80
Richmond (Zone 4) to Stratford (Zone 2), off-peak avoiding Zone 1: from £2.20 to £2.40
Upminster (Zone 6) to Cannon Street (Zone 1), peak: from £5.80 to £5.90
Piccadilly Line, Zone 1 to Heathrow Airport: from £5.80 to £5.90
In addition, fares on the Elizabeth line between central London and Heathrow Airport will increase from £13.90 to £15.50, a rise of 11.5%.
Some Positive News for Regular Passengers
There are, however, some measures that remain unchanged:
Travelcards and daily fare caps will be frozen until March 2027.
Concessions such as the Zip Photocard, 18+ Student Oyster card, 18–25 Railcard-style discounts, and the 60+ Oyster card will remain unchanged.
London bus and tram fares will be frozen until July 2026. The “Hopper Fare” will stay at £1.75, allowing unlimited bus transfers within one hour.
In addition, regulated intercity rail fares will also be frozen in line with commitments made in last autumn’s Budget. This applies to commuter season tickets, peak return fares, and off-peak returns between major cities, with the freeze expected to last until March 2027.
The fare increase has drawn criticism from some members of the public and campaign groups. The advocacy group Fare Free London has called for fully free public transport, arguing that raising fares amid ongoing cost of living pressures will further burden residents.
In response, Sadiq Khan stated that the government’s £2.2 billion investment in TfL was conditional on London Underground fares rising by inflation plus 1%. He added that efforts had been made to limit the impact, with contactless “pay as you go” fare increases capped at 20 pence, and many fares rising by only 10 pence.
Unless the government intervenes again or announces a further freeze, London Underground fares are typically reviewed and adjusted each March.
Replacement Lifetime ISA for first-time buyers only
HMRC has confirmed plans to introduce a new Individual Savings Account (ISA) designed specifically for first-time buyers, replacing the Lifetime ISA (LISA) as a home-buying savings product rather than a retirement savings tool.
Under the proposal, the government bonus for the new product will no longer be paid with each contribution, as is currently the case with the Lifetime ISA. Instead, the subsidy will be granted as a one-off payment at the point of property purchase. This approach effectively marks a return to the model previously used by the Help to Buy ISA, which was withdrawn in 2019.
The government’s decision is partly driven by ongoing criticism of the high withdrawal penalties associated with the Lifetime ISA. At present, savers who withdraw funds for purposes other than buying a first home are subject to a 6.25% withdrawal charge.
The policy also clarifies that, until the new product is officially launched, individuals can still open a Lifetime ISA, and existing account holders may continue to contribute under the current rules. The annual contribution limit for the Lifetime ISA will remain at £4,000, at least until April 2031.
Rachel Vahey, Head of Public Policy at AJ Bell, noted that since its launch in 2017, the Lifetime ISA has helped thousands of young people get onto the property ladder, but the scheme has not been without flaws. She said it is unsurprising that a new model is being considered as a replacement. According to Vahey, paying bonuses upfront means they must be clawed back if the funds are not used for their intended purpose, which has contributed to frequent issues with withdrawal penalties. Moving the subsidy to the point of purchase would make the system simpler to administer.
However, financial experts have also raised concerns about how transfers from existing Lifetime ISAs will be handled under the new scheme. Industry commentators warn that a policy focused solely on home-buying support could reduce options for those who have been using the Lifetime ISA as a long-term retirement savings vehicle. For self-employed individuals or those without access to workplace pensions, the ability to continue saving in existing Lifetime ISAs provides some continuity, but it does not fully address the broader need for long-term retirement savings solutions.
Rate of small employer relief for statutory payments to increase
HMRC has confirmed that from 6 April 2026, the compensation rate under the Small Employers’ Relief (SER) scheme for certain statutory payments will be increased.
This change means that employers who qualify for SER will be able to reclaim a higher percentage of costs from HMRC after paying statutory benefits to employees, helping to ease financial pressure on businesses. The compensation rate will rise by one percentage point, reaching 9%.
Eligible statutory payments that can be reclaimed include:
● Statutory Maternity Pay
● Statutory Paternity Pay
● Statutory Adoption Pay
● Shared Parental Pay
● Parental Bereavement Pay
● Neonatal Care Pay
Currently, UK employers can generally reclaim 92% of the statutory payments they make to employees.
Under the Small Employers’ Relief rules, businesses that paid less than £45,000 in Class 1 National Insurance in the previous tax year may qualify to:
● Reclaim 100% of statutory payments made; and
● Receive an additional compensation amount.
This additional compensation will increase from the current 8.5% to 9% for the 2026–27 tax year. In addition to the increase in the SER compensation rate, several important employment-related changes will take effect in April 2026:
● The National Minimum Wage will rise by up to 7%, depending on the worker’s age;
● New “Day One Rights” for employees will be introduced, including:
○ Statutory sick pay rights
○ Parental leave rights
○ Protection against unfair dismissal
○ Safeguards relating to zero-hours contracts
These changes will come into force under the Employment Rights Act 2025 and will affect businesses of all sizes across the UK.
Businesses are advised to review whether they qualify for Small Employers’ Relief and assess the impact of the new rules on payroll and tax planning. Seeking advice from a professional tax adviser can help ensure compliance and optimise cost management.
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