On Wednesday 28 October 2026, John Healey presented his first Budget as Chancellor. He argued that fighting in the Middle East, together with the war Russia is waging in Ukraine, had pushed up costs for households, firms and local communities. The package concentrates on energy bills and other day-to-day pressures, and it steers clear of lifting the main rates of personal tax across the board.
What follows is a summary of the points most likely to matter for personal finances, pensions and savings. It is not a recommendation for any individual. Announcements still have to pass into law, and several do not start for months. Some tax rates and bands differ for Scottish taxpayers, so not every point applies in the same way across the UK.
Where does the OBR now see the economy?
The Office for Budget Responsibility (OBR) now puts growth at 1.2 per cent in 2026, slightly above the 1.1 per cent in its spring forecast. It then expects a slower 2027, at 1 per cent rather than the 1.6 per cent it had previously assumed, before a return to 1.6 per cent in 2028. Our note on the Spring Forecast 2026 sets out the projections this Budget is updating.
Inflation is put at an average of 3.1 per cent in 2026 and 3.4 per cent in 2027, both above the earlier outlook, before a return to the 2 per cent target in 2028. The Chancellor said each G7 country had seen the cost of borrowing climb to heights rarely reached in recent decades. The OBR expects the interest bill on government debt to run about £14 billion a year higher than it forecast in the spring.
Debt is expected to stand at 96 per cent of national income in the current year, reach 97 per cent in 2028/29, and be back at 96 per cent in 2031. Borrowing is put at 4.2 per cent of GDP this year, then on a downward path to 1.8 per cent of GDP by 2031/32. The OBR also expects the debt ratio in the final year of its numbers to sit below the 2026/27 level. Even so, borrowing is higher in every year of this forecast than in the previous one.
Recent activity was described in more encouraging terms. In the first six months of the year, British growth was tied for the quickest in the G7, and output rose 0.7 per cent in the three months to August. Since this Parliament began, investment across the whole economy is up 6.9 per cent and business investment is up 7.5 per cent. Productivity growth last year was above 2 per cent.
Under the stability rule, the margin is £15 billion in 2029/30 and £22 billion a year later. Higher debt interest linked to the Middle East, the Chancellor said, more than accounts for the thinner 2029/30 margin compared with the spring. Under the investment rule, the margin is £24 billion in 2029/30. The government is also sticking to a pledge of more than £120 billion of additional capital spending during this Parliament, measured against the plans it inherited. He quoted the International Monetary Fund to the effect that Britain has cut borrowing by more than any other G20 member this year, and that from 2029 it is forecast to borrow less than any other G7 country.
Is the Cash ISA allowance staying at £20,000?
It is. The government has abandoned the proposal in the Autumn Budget Statement 2025 to limit Cash ISA subscriptions to £12,000 a year for people under 65 from April 2027. The annual Cash ISA allowance remains £20,000. Ministers had been warned that a tighter cap could discourage saving and leave people with less room for rainy-day money, a house deposit or other spending they can already see coming.
A second idea is still only an outline. The Chancellor said the government will work with the industry on a “starter ISA” to succeed the Lifetime ISA, with the aim of drawing more people into investing for the first time. Who could open one, how much they could pay in, how it would be taxed, whether there would be a bonus, and when it would launch have not been published. It is also unclear whether the Lifetime ISA would be withdrawn or kept running beside the new account. Until that is settled, ISA rules should be treated as unchanged except for the decision to keep the full Cash ISA allowance.
What help is there with energy bills?
The household measure with a date attached is a one-off £100 for homes in England in council tax bands A, B, C and D. It is due to be paid into bank accounts from January 2027 and to reach up to 20 million households. The scheme, called the Household Energy Payment, is costed at £2.6 billion. Scotland, Wales and Northern Ireland receive an equivalent sum through the Barnett formula. Part of the cost is to come from a temporary increase in the surcharge banks pay on their profits, 6 per cent instead of 3 per cent, running from 1 January 2027 to 31 March 2028.
The cut in VAT on electricity runs on until July 2027. The government expects that to take about £50 off the annual Ofgem price cap in April 2027. The 5p reduction in fuel duty, and the freeze that sits with it, continue until 1 July 2027, as does the road-tax holiday for heavy goods vehicles. Fuel duty stays at its lowest for more than 16 years. The rate on red diesel stays at its lowest for more than 20 years.
The fixed daily charge on gas is to be scrapped for households in England, Scotland and Wales. That cost moves onto the price of each unit, with extra steps so the shift is applied fairly. Electricity standing charges are to be reformed as well, with the detail left for next year. A scheme called the Energy Debt Circuit Breaker is expected to trim about £30 from bills for every customer by 2030. A levy that would have put the cost of hydrogen projects onto gas bills, the Gas Shipper Obligation, is being dropped. Government will meet that cost instead.
The government has said it will not place any fresh policy costs on bills before a Cost Control Framework is agreed at the 2027 spending review. New power stations are to be bought only where they cut bills, help the system and the grid can carry them. A consultation issued with the Budget looks at wholesale contracts for difference as a way to loosen the link between the gas price and what people pay for electricity.
For manufacturers, 10,000 firms that use a lot of energy are to be offered an electricity discount of 20 to 25 per cent from April 2027, including support dated back to cover 2026/27. Import duty is also being suspended for a time on over a hundred grocery and drink products.
What is changing for pay, the State Pension and carers?
Both the National Living Wage and the minimum wage rates are due to rise by 3.9 per cent in April 2027. Parental pay is being opened up to fathers who are self-employed, and to partners, including parents in same-sex couples. The 55p tax-free mileage rate for the first 10,000 miles driven for work in your own car is being made permanent. For miles above that, the rate goes from 25p to 35p.
From April 2027, someone on the newer flat-rate State Pension is due an extra £488 over the year, a 3.9 per cent rise under the triple lock. People still on the basic State Pension are due an extra £374.40 over the year. A new Pension Tax Allowance is there to honour a promise about a narrow group: during this Parliament, a pensioner whose income does not exceed the full flat-rate State Pension should not start paying income tax simply because that pension has gone up. It is not a general exemption for people who also have a private pension, earnings or other taxable income.
Someone who cares unpaid will not forfeit every pound of Carer’s Allowance the moment their earnings, after tax, go above £204 a week. A taper replaces that cliff edge.
Is the triple lock being changed?
Not for the increase due next April. The triple lock still produces the 3.9 per cent State Pension rise in April 2027. From the following Parliament, the government wants to reshape the lock so it can help pay for a wider settlement in later life: the State Pension would still rise each year, personal care would be provided without a charge at the time it is used, and England would have a National Care Service. The adult social care commission chaired by Baroness Casey is due to report in 2027 and is expected to shape that longer plan. None of that alters the uprating already set out for April 2027.
What does the Budget do for shops, pubs and other local businesses?
In England, public houses, live-music venues and clubs run for their members are to get a further 20 per cent off their business rates. High street premises will not start paying rates until the rateable value reaches £18,000, up from £12,000. Through that higher small-business threshold, the government says another 70,000 shops, hospitality firms and leisure businesses will pay nothing at all. For two years, other premises in those trades have their rates frozen so the bill cannot rise faster than inflation. From April, the aim in England is that rates for shops, hospitality and leisure are held flat after inflation, reduced, or wiped out. Vape retailers and adult gaming centres do not qualify.
Part of the cost is to be met by collecting VAT that online sellers already owe. Large marketplaces, Amazon, eBay and Temu among them, will have to collect it so that traders on those sites cannot duck the charge. Duty on the higher-stakes gaming machines rises from 20 per cent to 25 per cent, and that also contributes to the rates freeze. Small alcohol producers get a more generous Small Producer Relief, worth £10 million a year and reaching more than 2,000 businesses across the UK.
Income tax, National Insurance and VAT are not having their headline rates increased, and the corporate tax roadmap from 2024 still stands. The government does plan to take more from property income and from savings income, in a way it describes as proportionate. The rates for that increase are not set out in this summary. Interest and gains inside an ISA stay outside that change, which is part of why the Cash ISA decision matters. The temporary bank surcharge described above is the other source named for the household energy payment.
Further tax measures are narrower. Tax on company distributions is to be modernised, while ordinary commercial transactions, including the handover of a family business, are to be protected. The tax treatment of larger minicab operators is to be evened up, and overseas businesses are not to be able to undercut UK firms through the tax rules. Capital allowances are being recast so the immediate incentive to invest is stronger, while also raising revenue. The detailed percentages for those allowance changes are not in this guide.
Housing, work and the rest of the package
Social and affordable housing in England is to receive another £1.5 billion, earmarked for around 10,000 homes and weighted towards social rent, especially council housing. That takes the Social and Affordable Homes Programme past £40 billion over ten years. A further £432 million supports a programme aimed at giving everyone sleeping rough in England a route into accommodation before Christmas 2026. The Your First Home equity loan is confirmed at £4.7 billion, with a target of helping 70,000 households to buy. Over the coming decade the government wants to start the largest council housebuilding effort since the post-war years.
Younger adults are offered a Jobs Guarantee if they are 18 to 24 and claiming Universal Credit, plus £100 million for local apprenticeship services. The Budget puts the number of younger people not in work, education or training at nearly a million. A white paper is expected early in 2027, once Alan Milburn’s final report and the Timms Review are complete.
Mayors and other local leaders in England gain more control over spending. The first slice is £285 million in the coming year, for homes, transport and town centres. From 2028, part of income tax revenue is to be passed to them, and the government will design a £1.5 billion borrowing facility with them. Before 2030, local areas are to keep the business rates they collect, and from next year mayors keep a fifth of that revenue. A separate package on regulation is intended to cut business costs by almost £800 million a year.
More than £600 million is going into artificial intelligence and the security around it, but not as a single pot. Cyber defence receives £154 million. A National Agentic Security Unit, set up to look into rogue automated incidents, receives £40 million. The Sovereign AI Unit, which is there to help promising British AI firms grow at home, receives £140 million. The AI Security Institute receives a further £120 million, and a National AI Biosecurity Initiative receives £165 million. Another £15 million goes to work on misogyny in schools, workplaces and communities.
How Britain gets to 3 per cent of GDP on defence by 2030, and to the NATO figure of 3.5 per cent by 2035, is to be set out when spending is reviewed in 2027. The Defence Investment Plan is described as paid for in full by moving money inside existing capital budgets. A new taskforce will look at private and international finance. Over four years, the National Wealth Fund and the British Business Bank are to commit up to £5 billion to defence, technologies with both civilian and military uses, and related parts of the economy. Ukraine is to get upwards of £10 billion in further financial help. Military aid of £3 billion a year continues to 2030/31, and past that date if it is still needed.
Routine departmental budgets are planned to stand £40 billion a year higher in 2028/29 than the plans the government inherited, with capital spending £120 billion higher across the Parliament. The 2027 spending review is also due to ring-fence a slice of budgets for prevention rather than cure. An outside look at how productive the NHS is, including where artificial intelligence could change treatment, has been asked for jointly by the Chancellor and the Health Secretary. Not every department should expect its budget to rise in real terms when that review lands.
What this means for your own plans
Much of the personal tax story is about a change that is no longer happening. The Cash ISA limit is not being cut, so there is no reason to move cash savings solely because of a cap that had been due in April 2027. If a starter ISA does replace the Lifetime ISA, that could matter for anyone saving for a first home, but there is nothing to decide until the rules exist.
Pensioners who live on the State Pension alone should look at the new Pension Tax Allowance, because it is there to stop the April uprating from creating a tax bill by itself. Anyone with other pensions, savings interest or rental income still needs to see the whole picture, especially if tax on savings and property income does go up. Carers earning around £204 a week after tax may find a taper easier to live with than losing the entire allowance at that point.
If you would like to talk through how the 2026 Budget sits with your savings, pension and tax position, we are happy to help. We work with individuals and families across Worcestershire and Warwickshire, and the conversations that help most are usually the ones that happen before a change comes in.
This article is our reading of the October 2026 Budget and is for general information only. It does not constitute personal financial, tax or investment advice. Tax rules, rates and allowances may be amended, and what they are worth turns on your own circumstances. Scottish taxpayers can face different rates and bands. The Financial Conduct Authority does not regulate tax or estate planning. The value of investments can fall as well as rise, and you may receive back less than you invested.