Budget 2026: what it means for your money

Published · Updated · By Money Engine

An energy bill and a calculator on a kitchen table.

Illustration: Priya is a nurse in Leeds on £35,000 a year. She rents a council tax band B flat and has savings in an ordinary easy-access account that pay her £1,400 of interest a year. Priya is an illustrative example, not a real person, and her figures are worked out from the published rates.

On this year's rules her income tax is £4,486 and her National Insurance is £1,794.40, using HMRC's 2026 to 2027 rates. The 28 October Budget doesn't change either. What does change: her home is in band B in England, so she should get the new £100 Household Energy Payment from January 2027. From April 2027, though, the tax on her savings interest goes up by £8 a year compared with what it would otherwise have been. We show the working at the end of the article.

The Chancellor delivered the Budget on 28 October 2026. The Budget document says there is no increase to the headline rates of income tax, National Insurance contributions or VAT. Below is what does change, when and for whom.

Many measures still need Parliament. Where the Budget names the bill that will carry a change, we say so.

Energy bills and the cost of living

  • £100 Household Energy Payment. Households in council tax bands A to D in England get £100 from January 2027, paid through the council tax system. That covers up to 20 million households. Scotland, Wales and Northern Ireland get funding through the Barnett formula to provide similar support. Source. Status: a spending measure delivered by councils. The Budget names no legislation for it.
  • VAT on household electricity. The 0% VAT rate on domestic electricity in Great Britain, in place since 1 October 2026, is extended to July 2027. The Treasury expects this to take around £50 off the annual Ofgem price cap in April 2027. In Northern Ireland, the extended relief is expected from April 2027. Source. Status: the Budget document doesn't say how this will be legislated.
  • Fuel duty. The 5p a litre cut and the freeze are extended to 1 July 2027, instead of the 5p going back on in January 2027. The planned RPI increase is also deferred to 1 July 2027. Source. Status: the Budget document doesn't give the legislation route.
  • Mileage rates for people who drive for work. The 55p a mile tax-free rate for the first 10,000 business miles in a car or van becomes permanent. The rate above 10,000 miles rises from 25p to 35p from 6 April 2027. Source

Wages

From 1 April 2027 the National Living Wage rises 3.9% to £13.21 an hour. The Treasury says that's worth £910 a year in gross pay for a full-time worker. The rate for 18 to 20 year olds also rises 3.9%, to £11.27. Source. Status: the government is accepting the Low Pay Commission's recommendations. The Budget document doesn't name the legal instrument.

Income tax and National Insurance thresholds

There is no new freeze in this Budget, but the existing one stays in place. The Treasury's policy costings (Annex A) list the Personal Allowance, the basic rate limit and the National Insurance primary threshold as held at their 2021-22 levels up to and including 2030-31. For 2026-27 that's a £12,570 Personal Allowance, with National Insurance at 8% between £12,570 and £50,270. Status: already announced and unchanged.

Savings, ISAs and property income

  • Savings income tax. The rates of income tax on savings income go up by 2 percentage points, to 24% (basic), 44% (higher) and 49% (additional), across the UK from 6 April 2027. Source. Interest covered by your Personal Allowance, the Personal Savings Allowance (£1,000 for basic rate taxpayers, £500 for higher rate) or the starting rate for savings isn't affected, and neither are ISAs (policy costings). Status: to be legislated in Finance Bill 2026-27.
  • Property income tax. Landlords' rental income will be taxed at 24%, 44% and 49% from 6 April 2027 in England, Wales and Northern Ireland. Source. Status: to be legislated in Finance Bill 2026-27.
  • Cash ISA limit kept at £20,000. The previously announced cut to £12,000 for under-65s from April 2027 won't happen (policy costings; Budget document). If you read our earlier piece on the £12,000 limit, this replaces it. Status: the Budget document doesn't give a legislation route.
  • Lifetime ISA. From 29 October 2026, the charge for withdrawing Lifetime ISA money to buy a first home costing over £450,000 falls from 25% to 20%. Other unauthorised withdrawals still cost 25%. Source
  • First Time Buyer ISA. A new ISA replaces the Lifetime ISA for new savers from April 2029. It allows up to £4,000 a year with a 25% bonus, capped at £20,000, on first homes worth up to £450,000, and has no upper age limit. Source. Status: under consultation.

Pensions

  • State Pension. The Triple Lock continues, with rises by the highest of 2.5%, inflation or earnings growth each year through to April 2029. From April 2030 it rises by the highest of 2.5%, inflation, or the amount needed to keep its value relative to earnings as reached in April 2029. Source. The April 2027 cash rate wasn't in the documents we checked.
  • Pension Tax Allowance. From 6 April 2027 to 5 April 2030, people over State Pension age whose total income is no more than the full new State Pension won't pay income tax, with a taper just above that level. Source. Status: to be legislated in Finance Bill 2026-27.

Property taxes and stamp duty

The Budget doesn't announce any change to the main Stamp Duty Land Tax rates for home buyers. Our Stamp Duty calculator uses the current rates. The High Value Council Tax Surcharge, on homes in England worth £2 million or more (consultation), now has confirmed deferrals, discounts, exemptions and a 100% premium on homes empty for 12 months or more. The relief rules apply from 1 April 2028 (Budget table 6.1). Status: Finance Bill 2026-27 (source).

First-time buyers in England can get 20% equity loans under the new Your First Home scheme, with pre-registration by the end of December 2026 and first loans from April 2027. Source. Status: MHCLG will legislate as soon as Parliamentary time allows.

Benefits, carers and students

  • Universal Credit. The £2,500 surplus earnings threshold stays for another year, to the end of March 2028. Source
  • Carer's Allowance. In England and Wales, the cliff edge at the Weekly Earnings Limit is replaced by a taper, planned for 2030-31. Source
  • Child Benefit. HMRC will offset Child Benefit overpayments against the High Income Child Benefit Charge. Source. Status: Finance Bill 2026-27.
  • Student loans. Interest on Plan 2 and Plan 3 loans is capped at 6% from 1 September 2026 to 31 August 2027. This was announced before the Budget and is costed in it (policy costings). See our Student Loan calculator.
  • Side income. The Trading Allowance rises from £1,000 to £3,000 from 6 April 2027. Source. Status: Finance Bill 2026-27.

Priya's numbers: the working

Income tax 2026-27: (£35,000 − £12,570) × 20% = £4,486. National Insurance: (£35,000 − £12,570) × 8% = £1,794.40 (HMRC rates).

Savings: her £35,000 salary plus £1,400 of interest stays inside the basic rate band, so her Personal Savings Allowance is £1,000 (GOV.UK). That leaves £400 of interest to tax. In 2027-28 that's £400 × 24% = £96, against £400 × 22% = £88 before the 2 point rise (Budget document). The difference is £8 a year. This assumes her interest and her allowance stay the same.

You can see how your own pay comes out with our Take-Home Pay calculator, and plan for the energy payment and winter bills with the Budget Planner. If you're over 55 or getting close to State Pension age, try the Retirement Planner.

This article is general information based on the Budget 2026 documents published on 28 October 2026. It isn't financial advice, and Money Engine isn't authorised by the FCA. Measures marked for a Finance Bill or other legislation may change before they become law.

Sources

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