The United Kingdom government has announced its 2026 Budget, introducing measures aimed at easing the cost-of-living pressure on households, supporting businesses and boosting long-term economic growth.
The Budget, unveiled on Wednesday, 28 October 2026, outlines plans to reduce energy costs, extend fuel duty relief, increase the National Living Wage and expand support for housing and businesses.
Under the proposals, eligible households in England will receive a £100 Household Energy Payment in 2027, with funding for similar support to be provided across the rest of the UK. The government will also extend the temporary reduction in VAT on electricity bills until 1 July 2027.
The measures are expected to provide some relief as families continue to face pressure from rising everyday expenses.
Minimum Wage to Rise in 2027
Workers earning the National Living Wage are also set to benefit from an increase. From 1 April 2027, the hourly rate will rise by 3.9 per cent to £13.21, which the government estimates will add £910 to the annual gross earnings of a full-time worker on the rate.
The Budget also includes plans to extend parental pay to more than 160,000 additional parents, including eligible self-employed fathers and partners.
Drivers to Benefit From Fuel Duty Relief
Motorists will receive further support through an extension of the existing 5p fuel duty cut for another six months, while a planned inflation-linked increase will be postponed until July 2027.
The government estimates that its fuel duty decisions during the current Parliament will save the average car driver £230 compared with previous plans. It also announced measures intended to reduce the cost of using lower-powered public electric vehicle charging points.
New Support for Housing and First-Time Buyers
The government is committing an additional £1.5 billion to social and affordable housing, taking planned capital investment in the sector above £40 billion over the next decade.
A new First Time Buyer ISA is also planned to help people save towards a home deposit. Meanwhile, the withdrawal charge on Lifetime ISAs will be reduced to 20 per cent, with the government saying the change will help eligible first-time buyers purchasing homes above the existing £450,000 price cap.
An additional £432 million will be provided over two years to support efforts to tackle rough sleeping.
Businesses to Receive Further Relief
Retail, hospitality and leisure businesses in England will benefit from changes to business rates, including a two-year freeze in bills in real terms and measures designed to bring more properties outside the business rates system.
The government says around 70,000 additional businesses will be taken out of business rates through an increase in the Small Business Rates Relief threshold. It also plans to reduce electricity costs for more than 10,000 eligible energy-intensive businesses from April 2027.
Further investment will target British industries, including aerospace, life sciences, artificial intelligence and advanced manufacturing.
Tax Changes and Public Spending
The Budget includes targeted tax changes intended to finance some of the support measures while maintaining the government’s fiscal rules.
The Bank Corporation Tax Surcharge will temporarily rise from 3 per cent to 6 per cent for 15 months, with the additional revenue helping to fund household energy support.
From April 2027, tax rates on savings and property income will rise by two percentage points across all bands. The government estimates that 84 per cent of taxpayers will not see an increase in their tax bill as a result of these changes.
The Budget also introduces measures to tackle benefit fraud and errors, alongside plans to increase face-to-face assessments for health-related benefits.
Defence and National Security
The government has confirmed funding for its £15 billion Defence Investment Plan, including £4.7 billion that had previously been unfunded.
It also announced more than £10 billion in additional economic and military support for Ukraine, alongside plans to mobilise further investment in defence and national security.
The government says the Budget is designed to provide immediate financial relief while supporting investment, job creation and economic stability over the coming years.
