Millions more to get £150 off energy bills; Chancellor Eyes Softer Inheritance Tax; Bank of England Holds Rate at 4.25%
- TBA
- Jun 23
- 5 min read
Updated: 4 days ago
Millions more to get £150 off energy bills
Recently, the UK government announced a significant expansion of the Warm Home Discount scheme, doubling the number of households eligible for winter heating support. This winter, up to 2.7 million additional households are expected to benefit, including nearly one million families with children.
● Substantial expansion of eligibility
Under the new rules, any household receiving means-tested benefits will automatically receive a £150 discount on their energy bill, regardless of the size, type, or energy rating of their home. This change removes previous restrictions based on property conditions, allowing more low-income families to keep warm during the cold season.
Previously, the discount was limited to households receiving the guaranteed element of Pension Credit or meeting specific home energy efficiency criteria.
● Costs may be passed on to consumers, but the government pledges to offset them
The expansion will be funded upfront by energy companies, and the cost may be covered by slightly increasing the standing charge on all customers’ bills. As a result, consumers may see a small rise in their bills this autumn. However, the government has promised to offset this potential increase by reducing energy company expenditures and improving debt management, to minimize the burden on households.
● Possible new round of bill increases
Although the energy price cap for the summer has already lowered household bills and policy measures have reduced standing charges, the continued rise in global oil and gas prices means that industry experts generally expect gas and electricity bills to increase again starting in October.
● Automatic compensation scheme to cover more situations
In addition to expanding the discount, the UK government also plans to broaden the automatic compensation scheme for energy customers. The new proposals include automatic compensation if customers experience excessive waiting times when calling their energy provider, or if they receive unusually high bills due to delays in adjusting direct debit payments.
At the same time, the government aims to speed up complaint handling: currently, energy companies have eight weeks to respond to customer complaints. The new rules will reduce this to four weeks. If no response is received within four weeks, the complaint will be automatically escalated to the Energy Ombudsman for further handling.
At present, customers are already entitled to automatic compensation in certain scenarios, such as when errors occur during a switch to a new supplier.
Chancellor considers softening inheritance tax changes amid non-dom backlash
According to reports, Chancellor Rachel Reeves is considering proposals to ease the planned inheritance tax reforms. This move is seen as one of her efforts to “retain” wealthy foreign residents in the UK following her announcement to abolish the non-domiciled (non-dom) tax regime.
The new policy, known as the Foreign Income and Gains (FIG) regime, came into effect on April 6th. It fundamentally changes how non-domiciled individuals are taxed by abolishing the remittance basis and imposing global taxation on any income or gains earned outside the UK.
When announcing the new FIG regime, Reeves stated, “Those who make the UK their home should pay taxes here.” Although the policy is expected to raise about £12.7 billion over five years, it has also triggered a significant exodus of wealthy individuals — in 2024 alone, the UK saw a net outflow of 10,800 millionaires, a year-on-year increase of 157%. This includes 78 centi-millionaires and 12 billionaires.
Facing strong opposition to the new regime, Reeves has made slight adjustments to the transition arrangements and is now considering amending the legislation that took effect in April. The current law requires all UK residents’ worldwide assets to be subject to a 40% inheritance tax, including assets held in trusts.
The independent Office for Budget Responsibility (OBR) forecasts that an additional 12%–25% of non-domiciled residents could leave the UK this year, potentially causing significant unforeseen economic impacts and further capital outflows.
A report by the Adam Smith Institute predicts that by 2030, this could result in the loss of around 44,000 jobs and an accumulated economic loss ranging from £3.2 billion to £111 billion. Many of the departing millionaires pay nearly £400,000 in taxes annually; their departure would equate to losing the tax contributions of around 529,200 average taxpayers, posing long-term consequences.
Interest rates held at 4.25% by Bank of England
Last week, the Bank of England decided to keep its base interest rate unchanged at 4.25%, aligning it with the current inflation rate and maintaining it at its highest level in over a year — above the Bank’s target rate.
Bank of England Governor Andrew Bailey said that the rate is “still on a gradual downward path” and hinted that a rate cut could happen as early as August. However, he cautioned, “The global situation is highly unpredictable.”
The Bank warned that tensions in the Middle East could have a knock-on effect on the UK economy. Since its last meeting in May, oil prices have risen by 26% and petrol prices by 11%, driving up energy costs and overall prices, which will influence future interest rate decisions.
Meanwhile, the Bank slightly raised its forecast for the UK economy but noted that underlying growth remains “weak.” So far this year, the UK’s economic growth has been uneven — strong in early 2025 but shrinking sharply in April. The autumn budget’s various tax measures have also led to signs of weakness in the labour market. Some companies have cut pay for certain employees and raised prices to offset rising costs, but results have been mixed.
For the year to May, the inflation rate stood at 3.4%, still above the Bank’s 2% target, and is expected to rise slightly to 3.5% later this year. However, it is forecast to fall back to around 2.1% by 2026.
Interest rates are the Bank’s main tool to keep annual inflation at or near its target. The theory is that raising rates increases borrowing costs, encouraging people to cut spending, which lowers demand for goods and helps curb price rises. But this must be balanced carefully, as high rates can hurt the economy by causing businesses to delay investment in production and jobs.
Despite higher UK tax revenues in April, they were not enough to prevent public sector borrowing from rising to £17.7 billion in May, up from £17 billion a year earlier — the second-highest monthly level on record. The current budget deficit — which measures the shortfall in day-to-day spending — remained below the Office for Budget Responsibility’s (OBR) forecast. The OBR had predicted a deficit of £13 billion for May, but the actual figure was £12.8 billion.
Most economic forecasting bodies, including the International Monetary Fund and the Bank of England itself, have downgraded the UK’s growth outlook for this year. This could reduce long-term tax revenue and may force the Chancellor to cut spending further or raise taxes to fill the gap.
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