The renewal tax: what it is and how to stop paying it
In short: the renewal tax is what you pay for doing nothing when a deal ends. Mortgages, energy fixes and broadband contracts all move you onto a pricier rate if you don’t choose a new one. Insurers can no longer charge loyal customers more than new ones, but shopping around still often beats the renewal quote. The fix is knowing the date, and acting a few weeks before it.
Most household bills are bought once and then left alone. That works until a deal ends. At that point the provider usually moves you to whatever they charge people who haven’t chosen anything, and that’s rarely their best price.
Where it still catches people
Mortgages
When a fixed or tracker deal ends, most lenders move you onto their standard variable rate. It’s typically far higher than the deals on offer, and on a large mortgage the difference can run to hundreds of pounds a month. Most lenders let you lock in your next deal months ahead, so the risk is simply leaving it too late. See what to do when your fixed rate ends.
Energy
If you’re on a fixed tariff and don’t pick a new one, your supplier moves you onto its standard variable tariff, which follows the price cap. You can usually switch without exit fees in the last 49 days of a fix. More in your energy fix is ending.
Broadband and phone contracts
When the minimum term ends, many providers put the price up. Ofcom found that customers who switch or sign a new deal save around £100 a year on average, and providers usually offer a discount if you ask. See how to haggle your broadband.
Car and home insurance
Since 1 January 2022, the FCA has required insurers to offer renewing home and motor customers a price no higher than they’d charge a new customer. That ended “price walking”, where loyal customers paid a bit more every year. It didn’t make your renewal quote the cheapest on the market, though: other insurers may still be cheaper, and the FCA itself says shopping around can still pay. When you get quotes matters too. See the best time to renew car insurance.
How to stop paying it
- Write down every renewal date. Mortgage fix, energy fix, broadband and phone contracts, car and home insurance, MOT, vehicle tax, boiler service, TV licence, passports.
- Set a reminder for the right time, not the deadline. Months ahead for a mortgage, three to four weeks for insurance, a few weeks for energy and broadband.
- Get quotes, then ring your current provider. Tell them the best price you found and ask them to beat it.
- Note what you paid. Next year you’ll know straight away if the renewal quote has crept up.
How Sort Admin helps: add each renewal once with its date, and Sort Admin reminds you at the right time for that kind of bill, then shows you what to do: get quotes, ring your provider with your policy number ready to copy, and log the new price so you can see what you’ve saved.