Chancellor to deliver first Budget next week

Chancellor John Healey delivered his first Budget on 28 October 2026, setting out action on energy bills, fuel duty, wages and pensions alongside funding for the Scottish and Welsh governments¹. Ahead of the statement, BBC Radio 4's Money Box reported that the former defence minister was under pressure to fund defence spending, "good growth" pledges and cost of living help⁴.

On energy, the Treasury said the temporary VAT cut on household electricity bills would be extended to 1 July 2027, taking around £50 off the Ofgem annual price cap in April 2027, and that a £100 Household Energy Payment would go to up to 20 million households in council tax bands A to D in England, with funding for similar support in the rest of the UK³. The 4% tariff on kerosene is to be removed, which the government said would support 142,000 Scottish and 105,000 Welsh households that rely on heating oil¹. The Bank Corporation Tax Surcharge will rise from 3% to 6% for 15 months, raising £1.5 billion, before ending on 31 March 2028³.

The 5p cut to fuel duty is extended for six months to 30 June 2027, and the planned RPI increase is deferred to 1 July 2027¹. The government said its fuel duty decisions mean petrol and diesel will be 15p per litre cheaper from April 2027³. Tax-free mileage rates rise permanently, with the higher rate going from 25p to 35p per mile⁵.

The Treasury said the National Living Wage uplift adds £910 to the gross annual earnings of a full-time worker³. On pensions, it said 93,000 low-income pensioners in Scotland and roughly 64,000 in Wales will pay less tax or none at all on their income by the end of this Parliament¹. MoneyWeek reported before the Budget that the full new state pension was expected to rise 3.9% to £250.70 a week, or around £13,036 a year, above the £12,570 personal allowance⁶; the Express reported around one million low-income pensioners would be protected⁷.

The Chancellor also said he would not proceed with a cut to the cash ISA allowance, which stays at £20,000 a year, and that a new First Time Buyer ISA will replace the Lifetime ISA⁵. From the day of the Budget the Lifetime ISA withdrawal charge falls to 20%³.

Why it matters for households

The energy, fuel and tariff measures are time-limited, running to mid-2027, so the relief they give to bills and pump prices is temporary unless extended¹. The £100 energy payment applies to households in bands A to D in England, with the devolved governments receiving a share of the funding and deciding whether to match it³. The wage rises take effect on 1 April 2027³. The savings and property income tax rise applies from April 2027 across all bands³. The Scottish and Welsh governments receive an additional £600 million and £450 million respectively for public services¹.

What happens next

The Budget was delivered on 28 October 2026¹. The wage changes take effect on 1 April 2027, the savings and property income tax rise from April 2027, and the extended VAT cut and fuel duty cut run to 1 July 2027 and 30 June 2027 respectively¹. The Bank Corporation Tax Surcharge increase ends on 31 March 2028³. Further detail on the tax changes has not been reported.