Budget 2026: what changes and when

Date by date

The tax changes are announced, not yet law. They’re due in the Finance Bill 2026-27, which goes through Parliament over the coming months, so the details can still change.

See what it all means for you, in pounds →

Energy, fuel and getting about

The £100 Household Energy Payment. Homes in England in council tax bands A to D, about 8 in 10, get £100 from January 2027 through the council tax system: you don’t need to apply. Scotland, Wales and Northern Ireland get a share of the money to offer similar help, in their own way.

No VAT on electricity until July. Household electricity has had no VAT since 1 October 2026, and the Budget keeps it at 0% for three more months, to 1 July 2027, and in Northern Ireland from April. The Budget’s figure is “around £50 off the annual price cap”. That’s a yearly rate, though, and the extension lasts three months: on an electricity bill of £80 a month it saves about £12.

Fuel duty. The 5p a litre cut was due to start coming back from January 2027. It now stays until 1 July 2027, and the yearly inflation rise is put back to July too. With VAT on top, that’s 6p a litre less than planned: about £30 for a car doing 10,000 miles a year.

Bus fares. Single fares in England outside London are capped at £2 instead of £3 through 2027. This was announced in July and is paid for in the Budget.

Driving for work. The tax-free rate for your own car or van stays at 55p a mile for the first 10,000 miles (it was a temporary rate), and goes up from 25p to 35p above that from April 2027. The Budget says that’s worth £120 a year to a basic rate taxpayer driving 6,000 business miles. Read using your own car for work for how to claim.

Pay and work

On 1 April 2027 the minimum wage rises 3.9% for every age group. A full-time worker on the National Living Wage, 35 hours a week, gets £910 a year more before tax, and keeps £655 of it after Income Tax and National Insurance. The Minimum Wage Rise Calculator works it out for your hours.

The trading allowance, the side income you can earn tax-free from things like selling what you make or odd jobs, triples from £1,000 to £3,000 from 6 April 2027. If you earn £3,000 that way on top of a job, that’s £400 less tax a year at the basic rate.

Savings, rent and selling a business

Savings interest. From 6 April 2027 interest above your allowances is taxed at 24%, 44% and 49%, 4 points more than today: 2 points announced at the 2025 Budget and 2 more now. The Personal Savings Allowance (£1,000 or £500) and the starting rate for savings stay, and ISAs are untouched, so most savers pay nothing. Read how savings interest is taxed.

Rental profits. The same rates, 24%, 44% and 49%, apply to rental profits in England, Wales and Northern Ireland, with the mortgage interest credit rising from 20% to 24%. Scotland sets its own rates. Read the landlord mortgage interest rule.

Selling a business. The lifetime limit for Business Asset Disposal Relief halves from £1 million to £500,000 for sales from 6 April 2027. On a £1 million gain that’s up to £30,000 more Capital Gains Tax. A new Founders’ Relief, a 10% rate on up to £10 million of gains, starts at the same time for founders of fast-growing companies; who qualifies isn’t published yet.

Pensions and first homes

Pension Tax Allowance. From 6 April 2027 to April 2030, pensioners whose total income is no more than the full new State Pension won’t pay Income Tax, so the State Pension rising past the Personal Allowance doesn’t bring them into tax. It tapers away just above that.

Pensions left when you die. For payments from 28 October 2026, a pension or lump sum that would be tax-free no longer becomes taxable just because it’s paid more than two years after the death. Unused pensions still count towards an estate for Inheritance Tax from 6 April 2027, as already planned. Read pensions and Inheritance Tax from April 2027.

First-time buyers. Your First Home, a new scheme of 20% equity loans for around 70,000 first-time buyers in England, opens for pre-registration by the end of December 2026, with the first loans from April 2027. From April 2029 a First Time Buyer ISA replaces the Lifetime ISA for new savers, with the same £4,000 a year and 25% bonus and no upper age limit.

What isn’t changing

• Income Tax and National Insurance rates. The Personal Allowance and the bands stay frozen until April 2031, as planned before.
• VAT, apart from household electricity.
• Cash ISAs. The planned cut to £12,000 from April 2027 is dropped: you can still save £20,000 a year in cash.
• Dividend and Capital Gains Tax rates, Stamp Duty and Inheritance Tax thresholds.

Who comes out ahead, and who doesn’t

A household in England in band C, with a £35,000 salary, an £80 a month electricity bill and a car doing 8,000 miles a year, is about £136 better off in 2027: £100 from the energy payment, £24 on fuel and £12 on electricity. None of it carries on after July 2027.

A worker on the National Living Wage does better, and it lasts: £655 a year from April 2027 on 35 hours a week, on top of the temporary help.

A higher rate taxpayer with £3,000 of savings interest pays £100 more a year from April 2027, and a landlord with £10,000 of rental profit and £4,000 of mortgage interest £240 more. For them the temporary help is gone by July, and the extra tax stays.