Fuel duty freeze extended until July next year

The 5p cut to fuel duty will continue for a further six months, until 30 June 2027, under measures announced in Budget 2026 on 28 October 2026¹. The Independent reported that "the freeze in fuel duty has been extended until July next year"². The government's own announcement describes the measure as "the extension of the 5p cut to fuel duty for a further six months until 30 June 2027"¹.

The Budget also extended 0% VAT on household electricity bills for three months, to 30 June 2027¹. The 3.7p cut to red diesel duty continues, which the government said matters for farmers, rural hauliers and other fuel-heavy users¹. A permanent increase to the generosity of mileage rates was also announced, to support those who drive for work¹.

Other measures with a direct bearing on household costs included the removal of the 4% tariff on kerosene, which the government said would support the 105,000 Welsh households that rely on heating oil¹. Tariffs were axed on over 100 food products, including chocolate and fruit juice, which combined with earlier suspensions will save households up to £21 annually, according to the announcement¹.

On pay, the National Living Wage rises by 3.9% to £13.21 per hour, and the National Minimum Wage by 3.9% to £11.27 per hour for 18 to 20-year-olds and to £8.31 per hour for 16 to 17-year-olds and eligible apprentices¹. The Independent reported the minimum wage rise covers 2.3 million workers².

The Budget also set out changes on savings and property income. The Independent reported a 2 per cent rise in the rates of tax on income from property and savings from April, and that the tax-free cash ISA limit will remain at £20,000, reversing plans to cut the annual amount savers could put away to £12,000². It reported a pension tax allowance to prevent pensioners with incomes at or under the value of the full new state pension from paying tax². The government said roughly 64,000 low-income pensioners in Wales will pay less tax or none at all on their income by the end of this Parliament¹.

The Office for Budget Responsibility said the UK's "economic and fiscal position remains very challenging", and its Budget Responsibility Committee member Professor David Miles described a "pretty grim picture", noting virtually no growth in real household disposable income per person since before Covid². The Institute for Fiscal Studies' Helen Miller said the announcement offered a "raft of fiddly measures but very little that will move the dial on growth"². The Resolution Foundation said support of up to £116 announced would alleviate less than a fifth of a coming rise in energy bills, which it said are set to average £2,210 across 2027².

Why it matters for households

Drivers pay the same 5p-reduced rate of fuel duty until 30 June 2027 rather than seeing the cut lapse¹. Household electricity bills carry 0% VAT until the same date¹. Households using heating oil benefit from the removal of the 4% kerosene tariff¹. From April, savers and landlords face a 2 per cent rise in the rates of tax on income from savings and property, according to The Independent, while the cash ISA annual limit stays at £20,000². The minimum wage changes apply to 2.3 million workers, per The Independent². The Budget documents do not state the date the new wage rates take effect; that has not been reported in these announcements.

What happens next

The fuel duty cut and the 0% VAT on household electricity both run to 30 June 2027¹. The 2 per cent rise in tax rates on savings and property income takes effect from April². The government said it will set out how it will raise spending to 3.5 per cent of GDP by 2035 at the spending review next year². Further detail on tax measures and on how the changes interact with existing support has not been published in these announcements.