The chancellor, John Healey, has delivered the 2026 Autumn Budget. It included wide-ranging changes that will affect people of every age and from all walks of life.
Healey upheld many of Rachel Reeves’ commitments, including a pledge not to increase taxes on “working people” and a commitment to meeting the Labour Party’s self-imposed fiscal rules.
He also introduced a wide range of new measures, while rowing back on a key policy introduced by the former chancellor: the proposed reduction in the annual Cash ISA (Individual Savings Account) contribution limit from £20,000 to £12,000.
In this update, you’ll learn more about the key announcements that will affect both household and business finances.
Many of Reeves’ tax measures are being upheld
Healey said that Labour was keeping its promise not to increase taxes on working people.
In keeping with the Labour Party manifesto, Healey announced no further increases to the main rates of tax for individuals and businesses.
The taxes staying at their current rates for 2027/28 are:
- Dividend Tax
- Inheritance Tax (IHT)
- Capital Gains Tax (CGT)
- National Insurance
- The standard rate of VAT
- Corporation Tax (except for banks)
- Income Tax (with the exception of some savers and landlords)
In addition, existing “stealth taxes” – where tax-efficient thresholds are frozen instead of rising year-on-year – remain in place until 2031:
- The Personal Allowance of £12,570
- Income Tax thresholds
- The IHT nil-rate bands
The previously announced inclusion of most unused pension funds and pension death benefits within the scope of IHT will proceed from 6 April 2027.
New ISA announcements including a reversal of the Cash ISA limit reduction
A raft of changes and proposals were announced regarding ISAs:
- The decision to cut the amount under-65s could save into Cash ISAs from £20,000 to £12,000 has been reversed.
- A new First-Time Buyer ISA will replace the Lifetime ISA (LISA) from April 2029 for new savers and will allow contributions of up to £4,000 per year with a 25% government bonus. The Budget document says: “The bonus will be paid on the value of the account balance when funds are withdrawn for a qualifying first home purchase, up to the value of £450,000, so avoiding the need for any withdrawal charge. The new product will have no upper age restriction.”
- Savers who already have a LISA will be able to continue contributing to it.
- Healey also pledged to deal with the so-called LISA penalty, reducing the withdrawal charge from 25% to 20% for first home purchases above £450,000 that meet the other qualifying rules. This removes the penalty on savers’ original contributions. Other unauthorised withdrawals will retain the 25% charge.
- The government will investigate introducing a new ISA to reward first-time investors.
Healey announced further Income Tax increases for landlords and savers
Income Tax will rise by a further two percentage points for taxable property income for landlords in England, Wales, and Northern Ireland.
The same increase will potentially apply to savings interest outside of an ISA that surpasses an individual’s Personal Savings Allowance (PSA), which stands at:
- Basic-rate taxpayers: £1,000
- Higher-rate taxpayers: £500
- Additional-rate taxpayers: £0
The Income Tax rate was already set to go up by two percentage points in April 2027 for those who meet the criteria, so this reform brings the total increase to four percentage points.
The ordinary rates for Income Tax in England, Wales, and Northern Ireland are:
- Basic rate: 20%
- Higher rate: 40%
- Additional rate: 45%
From 6 April 2027, for taxable property income and on qualifying savings interest, the rates will stand at:
- Basic rate: 24%
- Higher rate: 44%
- Additional rate: 49%
The Budget document states that 84% of Income Tax payers will be unaffected by the property and savings income changes in 2027/28.
Important changes for those starting, growing, and selling their businesses
The chancellor placed a heavy focus on business owners in the Budget.
New business owners and newly self-employed people
- A new Young Entrepreneurs Allowance pilot in England will provide successful applicants with support towards their living costs during their first year in business.
- The existing Trading Allowance will increase from £1,000 to £3,000 from 6 April 2027, allowing individuals to receive up to £3,000 a year in qualifying trading and miscellaneous income tax-free.
- The British Business Bank will double its investment commitments to women-led businesses and funds to £200 million.
Those growing their business
- From April 2029, Self Assessment taxpayers who make payments on account will make smaller, more regular payments towards their tax bill.
- Also from April 2029, eligible self-employed fathers and partners in Great Britain will receive two weeks’ parental pay, currently worth up to £194 a week.
- The government will reform how payments from companies to individual shareholders are taxed, reducing opportunities to extract profits at more favourable tax rates.
- From April 2027, qualifying retail, hospitality, and leisure properties in England with a rateable value of up to £18,000 will qualify for full Small Business Rates Relief, up from £12,000. Tapered relief will extend to £21,000, up from £15,000.
For those disposing of business assets, the Budget presented a mixed bag
The chancellor announced a new Founders’ Relief, offering a 10% CGT rate on qualifying share disposals from 6 April 2027, subject to a £10 million lifetime limit.
The relief will target founders and significant early investors in high-growth, innovative UK companies. Detailed eligibility rules are being consulted on, including conditions relating to employees, turnover, growth, and research and development.
Healey also announced that the lifetime limit on gains qualifying for Business Asset Disposal Relief (BADR) will fall from £1 million to £500,000 from 6 April 2027. The Budget document says three in four BADR claimants will still receive relief on their entire gain.
Separately, the government plans to reform non-compete clauses to make it easier for businesses to recruit and for employees to move jobs.
The chancellor reaffirmed previously announced State Pension changes
The triple lock will be reformed from 2030
Honouring a manifesto promise, the chancellor confirmed that the triple lock will remain for the duration of this parliament.
As previously announced at the Labour Party Conference, it will, however, be adjusted from April 2030, when the State Pension will rise by the highest of inflation (as measured by the Consumer Prices Index), 2.5%, or the amount needed to maintain its value relative to earnings. This means it will track earnings growth over time.
The changes are projected to save £15 billion a year by the end of the 2030s, and £50 billion a year by 2050 with the savings used to fund the National Care Service in England, announced by the prime minister in September.
A new Pension Tax Allowance will protect pensioners as the full State Pension rises above £13,000
The full new State Pension will rise by 3.9% in April, bringing full payments above the Personal Allowance. This will bring payments for those eligible for the full amount to approximately £250.70 a week, up from £241.30 in 2026/27.
The increase will see the full new State Pension rise above the Income Tax Personal Allowance of £12,570 a year for the first time. Previously, the government said that pensioners whose total income is no higher than the full new State Pension would not pay Income Tax, and this promise was upheld by the chancellor.
The government will, therefore, introduce the Pension Tax Allowance (PTA), ensuring that pensioners whose total income is up to the value of the full new State Pension will not pay Income Tax. The allowance will apply from 6 April 2027 until April 2030, at which point further arrangements will be considered.
More help for first-time buyers
With many aspiring homeowners struggling to get on the property ladder, Healey announced the Your First Home scheme for eligible first-time buyers purchasing qualifying new-build homes in England.
The scheme will offer a government equity loan worth 20% of the purchase price, with buyers needing a deposit of at least 2.5%. The loan will be interest-free for five years. Household income limits and local property price caps will apply.
Applications are expected to open in February 2027, with the first purchases taking place from April 2027.
Healey announced further support with household energy bills
Continuing his focus on giving families “breathing room”, the chancellor announced several measures to help households with their energy costs.
VAT reduction on energy costs
The temporary reduction in VAT on domestic electricity from 5% to 0% will be extended for three months, until 1 July 2027. The government expects this extension to take around £50 off the annual Ofgem price cap from April 2027.
Household Energy Payments
Households in council tax bands A to D in England will also receive a £100 Household Energy Payment from January 2027. Delivered through local authorities, the payment is expected to support up to 20 million households.
The devolved governments will receive funding to enable them to provide similar support.
Removing the standing charges on gas bills
Healey also announced plans to remove gas standing charges from domestic bills in Great Britain, aiming for delivery by the end of 2027 or as soon as possible afterwards.
Gas standing charges currently average £108 a year. However, these costs will move into gas unit rates, so removing the standing charge will not mean every household saves £108. The impact will depend on gas consumption, with targeted support planned for households adversely affected.
An extension to the fuel duty cut
The 5p cut and freeze on fuel duty will be extended until 1 July 2027.
The government also committed to:
- Reforming electricity standing charges, with details due in 2027
- Scrapping the planned Gas Shipper Obligation, which would have added costs to gas bills to fund hydrogen projects. These projects will instead receive government funding.
An increase to the National Minimum Wage and National Living Wage
As with the State Pension, the National Minimum Wage and National Living Wage will rise by 3.9% next April.
HMRC will receive “new powers” to claim tax from those who do not pay
The chancellor announced measures to close tax loopholes and recover unpaid tax.
These include reforms to how company payments to individual shareholders are taxed, reducing opportunities to extract profits at more favourable tax rates. From April 2029, Self Assessment taxpayers who make payments on account will also make smaller, more regular payments towards their tax bill.
From July 2029, HMRC will gain powers to recover lower-value tax debts through regular instalments directly from the bank accounts of individuals and companies who can afford to pay but repeatedly fail to do so. Safeguards will be developed before the powers are introduced.
Additional Budget measures that could affect you, your family, and your business
- An end to the Carer’s Allowance “cliff edge”. From 2030/31, the government plans to introduce a taper in England and Wales, so unpaid carers will no longer lose their entire Carer’s Allowance simply for earning a penny over the Weekly Earnings Limit.
- The removal of import tariffs on household staples and farming goods. “Family favourites” including baked beans, chocolate, and gherkins will see import tariffs removed. This will extend to some fertilisers and kerosene heating oil, helping households and farmers facing high bills.
- Investment of up to £5 million a year (for three years from 2027/28) in children’s organisations, such as Dolly Parton’s Imagination Library, which gives books to children.
- The introduction of a Misogyny Prevention Fund to support the government’s ambition to halve violence against women and girls.
- Welfare reforms. These will include a huge number of changes, to be set out in a white paper in 2027.
- Helping drivers with tax-free mileage rates. The rate for the first 10,000 qualifying business miles in an employee’s or self-employed person’s own car or van will remain at 55p a mile, following the temporary increase in May. For business mileage above 10,000 miles, the rate will rise from 25p to 35p a mile.
A temporary increase to the tax surcharge on banks
Healey announced a temporary increase to the existing Bank Corporation Tax Surcharge, pushing it up from 3% to 6% for 15 months from 1 January 2027 to 31 March 2028.
This increase was lower than some in the banking sector had expected, with reports suggesting a return to 8%.
The government is investing in AI and has increased the defence budget
The chancellor is extending an additional £10 billion of aid to Ukraine, and expects to spend 3.5% of GDP on defence by 2035.
As part of its push for national security, the government will also increase its investment in AI.
Commenting that “we are already world leaders in AI safety and security”, Healey announced around £500 million to strengthen AI security and resilience, alongside an additional £140 million for the Sovereign AI Unit.
In practice, the chancellor said this investment will include:
- New data centres, to keep data on British soil, including for the NHS and armed forces
- A Data Centre Covenant to create local jobs and protect the UK’s water supplies.
GDP, national debt, and inflation
As always, the chancellor announced the latest figures from the Office for Budget Responsibility (OBR).
Rising costs, along with the associated higher interest rates, have affected families and businesses, as well as the government.
OBR figures show the UK government will spend an average of £14 billion more a year on debt interest, compared to its March 2026 forecast. Healey explained he aims to reduce government borrowing to cut interest payments.
In the forecast, public sector net financial liabilities compared to GDP is predicted to be:
- 83.2% in 2026/27
- 83.8% in 2027/28 and 2028/29
- 83.1% in 2029/30
- 82.3% in 2030/31
- 81.7% in 2031/32
The previously speculated recession has not materialised. In fact, in the first half of 2026, the UK economy was the joint fastest-growing in the G7, along with the US.
Looking ahead, the OBR expects GDP to increase by:
- 1.2% in 2026
- 1% in 2027
- 1.6% in 2028
- 1.8% in 2029
- 1.7% in 2030
- 1.6% in 2031
While the OBR data indicates there is pressure on the government’s budget, Healey said the headroom established last year to absorb the impact of the Iran war means that taxes will not increase for working people.
Devolution will be a priority for this government
Healey stated that local leaders should not have to come “cap in hand” to Westminster to fund infrastructure projects in their region. With this in mind, the Budget set out a roadmap to fiscal devolution.
The government will introduce a Good Growth Fund, providing £285 million in transitional seed funding to local leaders for 2027/28.
Separately, from April 2028, a £1.5 billion borrowing facility will be available to Mayoral Strategic Authorities in England to support local growth projects. Devolved governments will receive additional funding through the Barnett formula.
Together, it is hoped these measures will promote growth.
Please note
All information is from the Budget documents on this page.
The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.
Tax treatment depends on your individual circumstances and may be subject to change in the future. If you are unsure of your tax position, you should seek independent professional advice.
