Chancellor John Healey has released the details of the Autumn Budget 2026. He confirmed that his choices have kept the Labour manifesto promise not to raise taxes on working people. He reiterated that he has concentrated on providing support to families and businesses, giving people breathing space on living costs.
Stating that the Middle East conflict has been a key driver in the Budget decisions, John Healey noted the increase in inflation, the impact that has been felt in public finances and the costs that have been driven up for families and businesses.
Energy bills
Gas bills are to be reduced from next year by removing the standing charges. The current daily charge, regardless of usage, is 30p. Therefore, scrapping this charge will save households over £100 per year. Similar reforms are to follow for electricity bills.
The VAT cut on household electricity bills is to be extended through the winter and spring and continue until July 2027. This will take £50 off the annual price cap.
Eligible households in England that fall within council tax bands A to D will receive a £100 ‘household energy payment’ in winter. Affecting 20 million households, this will be paid directly into people’s bank accounts to help with rising energy bills. A share of the funding set aside for this will be given to the Scottish, Welsh and Northern Ireland governments.
Fuel duty
The conflict in the Middle East is still driving high fuel prices. To help motorists with the costs through winter and spring, the 5p fuel duty cut has been extended until July.
The mileage rate for those who use their cars for work is to be increased from 25p to 30p per mile. The standard mileage rate is to be made a permanent increase.
Wages
The National Minimum Wage and the National Living Wage will both be increased by 3.9%. This will help 2.3 million of the lowest-paid workers.
The government has acknowledged the need to address the gender pay gap and will act soon to ensure that women are paid and promoted fairly.
Self-employed fathers and partners will be eligible for paid paternity leave.
The unfair cliff-edge rule that applies to the Carers Allowance is to be scrapped from the 2030/31 financial year.
Supermarket prices
Tariffs on more than 100 supermarket products are to be suspended, including some food staples.
Pensions
The triple lock policy means that the state pension will increase by 3.9% from April, in line with average wage increases.
With the new Pension Tax Allowance, pensioners who have an income up to the value of the full new state pension won’t pay income tax.
Triple lock changes will be made from April 2030. Annual increases will be based on the highest of inflation, 2.5% or the increase needed to maintain the pension’s value relative to earnings. The savings this will generate will be used to fund a National Care Service in England.
Businesses
Support is being given to high-street businesses, enabling them to invest, recruit and expand. For retail, hospitality and leisure businesses, there will be an increase in the threshold for small business rate relief. This will take the figure from £12,000 to £18,000. This measure means that 70,000 businesses will be removed from having to pay business rates altogether. To help fund this, taxes will be raised on gambling, whilst protecting pubs and seaside gaming centres.
A new trading allowance has been announced. This will raise the amount that people can earn from a new venture tax-free from £1,000 to £3,000.
A new young entrepreneurs allowance will also be launched. This will cover a year of living costs as young founders turn their ideas into businesses.
A new scale-up programme for female founders has been announced. The commitment to women-led businesses will be doubled, resulting in funds of £200 million.
For the founders of Britain’s most successful firms, a founders’ relief will be given. This will be a 10% rate on lifetime gains up to £10 million.
From October 2027, online platforms will collect tax on qualifying sales by UK VAT-registered businesses and other UK businesses that have a turnover of more than £90,000 a year.
Income tax
The administration of self-assessment income tax is being reformed. This will enable those who are affected to make smaller, more regular payments rather than facing larger bills that are harder to pay.
Capital gains tax
The threshold for business asset disposal relief in capital gains tax is to be reduced from £1 million to £500,000.
Savings
The tax-free amount that can be paid into a cash ISA will remain at £20,000 annually. A new Starter ISA is planned to make investment more accessible and reward first-time investors.
A First Time Buyer ISA will replace the Lifetime ISA. The LISA penalty will be dealt with so that investors get back at least what they paid in.
From next spring, a new scheme will be launched for first-time buyers who don’t have any backing from the Bank of Mum and Dad. The Your First Home scheme is a government-backed equity loan scheme. It aims to enable first-time buyers in England to buy new-build properties using an equity loan of 20% of the property’s value and a small deposit of 2.5%.
Banks
Taxes are to be increased in the banking sector as a way to help fund the breathing space that is currently needed by households and businesses. Banks will pay an extra 3% on the surcharge, taking the figure to 6%. This time-limited change will begin in January and continue for 15 months.
Technology
Regarding artificial intelligence (AI), the government has pledged an extra half a billion pounds to ensure that opportunities are seized and risks are guarded against.
A new deal for data centres in the UK has been set out, ensuring that when AI is used by the NHS and armed forces, the data is held in the UK. The British Data Centre Covenant will have strict tests that must be met by the data centres.
The aim is to ensure that the British people benefit from the huge potential upsides, with AI that is secure, safe and working for British people.
Regional changes
A number of multi-million investments will be made in various regions in England. The devolved governments will receive the equivalent funding.
Mayors and regional leaders are to be handed more money and additional powers to help transform communities. ‘Good growth funds’ will be provided to mayors and ‘incubator capital’ given to areas without mayors.
A commitment has also been made that 100% of business rates will be retained locally by the end of the decade. From next year, 20% of the revenue from business rates will go to mayors. From 2028, mayors will also receive a share of income tax receipts.
Additional powers will be given to mayors and some local authorities to introduce an overnight visitors levy.
Housing
The government has committed a further £430 million to tackle rough sleeping.
All land sold to social housing providers will be VAT-free.
An additional £1.5 billion is to be provided for the social and affordable housing programme.
Defence
The UK’s NATO commitment is to spend 3% on defence by 2030 and 3.5% by 2035. Details of how these targets are to be met will be detailed in next year’s spending review. A new defence finance taskforce will be launched to help understand how these targets can be achieved.
Additional economic and military support of £10 billion for Ukraine has been announced.
Speak to an expert adviser following the Autumn Budget 2026
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