Autumn Budget 2026: key measures from John Healey’s first Budget

Chancellor John Healey delivered the Autumn Budget 2026, his first, on Wednesday 28 October. He did not raise the headline rates of income tax, National Insurance or VAT. Instead he raised tax on savings and property income, scrapped a planned cut to the cash ISA limit and announced help with energy bills. HM Treasury described the package as breathing space for families and businesses alongside longer-term structural reform.

The measures below are taken from the Budget 2026 document and the Treasury’s Budget summary, both published on 28 October.

Energy bills and wages

• £100 Household Energy Payment: paid directly into bank accounts from January 2027 for households in council tax bands A to D in England, reaching up to 20 million homes at a cost of £2.6 billion. The devolved governments receive their share through the Barnett formula.
• VAT on electricity: the temporary cut is extended to July 2027. The Treasury expects it to take around £50 off the Ofgem price cap from April 2027.
• Gas standing charges: to be abolished from 2027, with targeted measures to ensure the change is delivered fairly.
• National Living Wage: rises 3.9% to £13.21 an hour from 1 April 2027, worth £910 a year to a full-time worker. The rate for 18 to 20-year-olds rises to £11.27.
• Fuel duty: the 5p cut is extended for a further six months. The Treasury says petrol and diesel will be 15p a litre cheaper from April 2027 than under previous plans.

Savings, ISAs and pensions in the Autumn Budget 2026

• Savings and property income: from April 2027, tax rates rise by a further two percentage points across all bands, on top of the two-point increase announced at Budget 2025. The Treasury says 84% of income tax payers are unaffected and around half the revenue comes from the top 10% of households.
• Cash ISAs: the planned cut to the cash ISA limit is reversed, so the limit stays at £20,000 for everyone.
• Lifetime ISA: the withdrawal charge falls to 20% with effect from Budget day. A new First Time Buyer ISA will follow as a simpler way to save for a deposit.
• Pension Tax Allowance: from April 2027, people above State Pension age whose total income is no more than the full new State Pension will pay no income tax. The Treasury expects around 500,000 pensioners to benefit in 2027-28.
• Triple lock: it will be adjusted from the next Parliament so that the State Pension tracks earnings over time. The government links this to funding a National Care Service in England.

Business and housing

• Banks: the Bank Corporation Tax Surcharge doubles from 3% to 6% for 15 months, from 1 January 2027, before ending on 31 March 2028. The Treasury expects it to raise £1.5 billion.
• Business rates in England: pubs, music venues and social clubs get an extra 20% reduction. A higher Small Business Rate Relief threshold means a further 70,000 retail, hospitality and leisure businesses will pay no business rates.
• Entrepreneurs: the lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000 from April 2027. A new Founders Relief offers a 10% Capital Gains Tax rate on up to £10 million of lifetime gains. The trading allowance triples from £1,000 to £3,000.
• Housing: £4.7 billion is confirmed for the Your First Home equity-loan scheme, which aims to help 70,000 households buy. An extra £1.5 billion will fund around 10,000 social and affordable homes in England.

The Budget also confirmed a fully funded £15 billion Defence Investment Plan and further AI investment, which follows the AI package the Treasury set out on 24 October.

The OBR forecast and the public finances

The Budget document sets out the Office for Budget Responsibility’s forecasts, published the same day:

• Growth: 1.2% in 2026, 1.0% in 2027 and 1.6% in 2028, then 1.8%, 1.7% and 1.6% in the following three years.
• Inflation: CPI averages 3.1% in 2026 and 3.4% in 2027. It peaks at 3.8% in the first quarter of 2027 and returns to the 2% target by the third quarter of 2028. The Treasury attributes the rise mainly to energy prices following the conflict in the Middle East.
• Unemployment: 4.7% now, forecast to rise to 5.1% in the second quarter of 2027.
• Borrowing: forecast to fall from 4.2% of GDP in 2026-27 to 1.8% in 2031-32.
• Fiscal rules: the stability rule is met with £15 billion of headroom in 2029-30, £9 billion less than in March. Headroom rises to £22 billion in 2030-31. The investment rule is met with £24 billion to spare.

Why it matters and what comes next

For most households, the immediate effect is help with energy and fuel costs. The main tax rises fall on savers and landlords with income outside ISAs, and on banks. Pensioners whose total income is no more than the full new State Pension will not be drawn into income tax. The long-term change to the triple lock will not take effect until the next Parliament. Many measures still need legislation, and several, including the First Time Buyer ISA and a new incentive for first-time stocks and shares ISA investors, depend on further design work.

This article is general information, not financial advice.

Sources: HM Treasury, Budget 2026 (28 October 2026); HM Treasury, Budget 2026: Breathing space for today, hope for the future (28 October 2026); HM Treasury, Pension Tax Allowance explainer (28 October 2026).