Train fare rises to be capped at 2.5%

This year's July RPI inflation figure of 2.5%, had meant that regulated fares, which include season tickets, would have risen by an average of 3.5% in January 2015. The formula that dictates rises is RPI + 1 percentage point.

But Osborne announced he is knocking 1 percentage point off the annual rise, meaning the new year increase will be limited to 2.5%.

He also announced he is scrapping the 'flex' rule which allows some train companies to push regulated fares up by a further 2% above the 3.5% rate, as long as the overall rise across all tickets is 3.5% on average.

The move means that no season ticket will rise by more than 2.5% and the Government claims more than 250,000 annual season ticket holders will save around £75 over 2014 and 2015.

Unregulated fares, such as off-peak leisure tickets, are set by the train companies, not the Government, and will be announced separately.

Train fares in Scotland are already capped at July's RPI rate of inflation, so they can rise by up to 2.5% in January 2015.

There are no planned price rises in Northern Ireland as Translink, which runs the rail network, does not increase fares in line with inflation.

And no decision's yet been made on rail fare prices in Wales.

Save money on train fares

To help you save on rail costs, here are some of our top tips (see our Cheap Trains guide for more):

• Buy in advance. Most train companies put tickets on sale 12 weeks ahead. So the earlier you book, the more chance you have of getting one of their cheap advance tickets.

• Two singles can beat a return. If you're going on a return journey, check if two singles are cheaper. It may not always be cheaper, but it's worth a try.

• Get a railcard. Frequent travellers should consider a railcard, if they qualify for one. Those aged 16-25, the over-60s, those with disabilities, couples and adults who travel with kids may all qualify. Most railcards cost £30 a year and get the holder a third off many fares.

• Split your ticket. Imagine you're travelling from London to Sheffield. If the train stops at Derby, check whether it's cheaper to buy a ticket from London to Derby and a second ticket from Derby to Sheffield. It's perfectly legal as long as the train stops at that intermediate station. Use our free TicketySplit tool to find out if you can get a cheaper walk-on single fare by breaking down your journey.

• Look for hidden promos. Lots of train companies have hidden promotions buried on their websites – which you won't find if you're going through a ticket booking website. For a full list of hidden promos, see our Cheap Train Deals page.

Additional reporting by Paloma Kubiak.