Last night we saw Chancellor of the Exchequer John Healey delivering the 2026 Autumn Budget, City-REDI breaks down what you need to know in this blog in case you missed it.
The UK Government’s 2026 Autumn Budget focused on easing cost-of-living pressures while maintaining tax revenues through continued frozen tax thresholds.
Key measures include a £100 energy support payment for around 20 million households in Council Tax bands A-D, an extension of reduced VAT on electricity until July 2027, and the planned removal of gas standing charges.
Standing Charges – the daily cost you pay to your supplier for having access to energy – will be scrapped from the gas bills of 23 million households by 2027 at the earliest.
For savers, the proposed reduction in the Cash ISA allowance has been reversed, keeping the annual limit at £20,000. At the same time, the Government announced plans to consult on a new Starter Investment ISA aimed at encouraging investment among younger savers.
Housing support was another major theme. The Lifetime ISA withdrawal penalty for homes costing more than £450,000 has been effectively abolished, while a new “Your First Home” scheme will offer interest-free equity loans to eligible first-time buyers from 2027.
The Budget also included a 3.9% rise in the National Minimum Wage from April 2027, a 4.3% increase in Universal Credit standard allowances, and changes to support pensioners, including a new pension tax allowance designed to prevent many low-income retirees from paying income tax on their State Pension.
However, income tax thresholds remain frozen until at least 2031, meaning many workers will continue to face “fiscal drag” as wage growth pushes more income into taxable bands. The freeze on Plan 2 student loan repayment thresholds also remains in place.
Workers who use their own car or van as part of their work will get more support with motoring costs from April 2027, under new mileage rate measures. The mileage rate – which is the maximum amount your employer can reimburse you tax-free for using your own vehicle for work – will stay at 55p a mile for the first 10,000 miles and increase from 25p to 35p a mile above 10,000 miles.
Happy news if you have a ‘side hustle’, currently, if you earn more than £1,000 a year by working for yourself – including through self-employment or ‘side hustles’ – you need to declare it to HMRC by registering for self-assessment. From 6 April 2027, this amount will rise to £3,000, thanks to an increase in the ‘trading allowance’ – meaning fewer people will have to file tax returns.
Overall, the Budget combines targeted support for households with measures that continue to increase tax revenues indirectly, creating a mixed picture for household finances over the coming years.
This blog was written by Ellie Macdonald, Communications Assisant, at City-REDI, University of Birmingham.
Disclaimer:
The views expressed in this post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.
AI was used in writing this blog.