On Wednesday 28th October, John Healey delivered his first Budget as Chancellor. The Budget came with a turbulent backdrop of higher than forecast borrowing and a rise in inflation in September. The ONS reported that borrowing for the financial year to date has almost hit £25bn. This is £6bn above the official OBR forecast. Inflation also rose to 3.5% in September, which the ONS reported is the highest it has been for a year.
Despite all this, Healey pledged to uphold the manifesto promises made in 2024, not to raise income tax, VAT or employee NI. He has stated his intention to drive “growth in every postcode, while giving businesses and families some breathing space”. Indeed, he opened the Budget by declaring it is a “Budget for the working people of Britain”.
Even though the Budget was deliberately planned to be soon into the new government’s tenure, there has been plenty of speculation in the media. So what was actually announced? In this article, we’ll run through some of the key points from the Budget, and discuss how they may affect you.
Pensions
Prior to the Budget, Andy Burnham announced his intention to adjust the State Pension Triple Lock. He suggested the average earnings element of the Triple Lock calculation may be removed, effectively making a Double Lock.
Until at least 2030, however, the Triple Lock will remain in place. The inflation rate in September is one factor in the calculation. Last week this was announced as 3.5%. The rise in State Pension in April 2027 will therefore be 3.9% – the growth in average earnings between May and July 2026. If you receive the new State Pension, from April 2027 you’ll receive £250.70 per week (around £13,036 per year). Those receiving the basic State Pension will see a rise to £192.10 per week (almost £10,000 per year).
The Chancellor also announced a Pension Tax Allowance. This will mean that pensioners who have an income up to the value of the full new State Pension will not pay income tax for the rest of this Parliament.
ISA changes
In the 2025 Autumn Budget, then-Chancellor Reeves announced a change to the cash ISA allowance from April 2027. Whilst the overall allowance will remain at £20,000, those under the age of 65 will be limited to investing a maximum of £12,000 into Cash ISAs.
Chancellor Healey announced in this year’s Budget, that this ISA reform will no longer go ahead. The limit will remain at £20,000 across all ISAs, tax-free, for people of all ages.
A new Starter ISA will be introduced to reward those investing for the first time. The intention is that this will make investing more accessible to all. More details will be announced in coming months.
Lifetime ISA
The Lifetime ISA (LISA) is currently available to those age 18-40. Its intention is to help them save for their first home, or for retirement. £4,000 may be contributed each tax year, taken from your £20,000 allowance. A 20% government bonus is added to all contributions made. Any withdrawal for reasons other than first home or retirement are subject to a 25% charge. If using the funds to purchase a property, its value may not exceed £450,000. If it does, your LISA will be subject to a 25% penalty charge.
Following a consultation period in June 2026, Healey announced the LISA would be replaced with a new First Time Buyer ISA (FTB ISA). If you already have a LISA, these will remain active, and all benefits will continue.
Healey also addressed the LISA penalties if the home you wish to purchase with your LISA funds costs more than £450,000. Going forward you will receive back “at least what you put in”.
Further detail about the FTB ISA may be announced in the future. We’ll continue to monitor any further announcements regarding this, so watch this space.
Help for first-time buyers
Prior to the Budget, Andy Burnham announced a new scheme to help first-time buyers get on the property ladder. The “Your First Home” scheme will require eligible individuals to have a 2.5% deposit for a new build property. The government will provide an equity loan equalling 20% of the new build home’s value.
Further details will follow about this scheme.
Energy bills
Just before the Budget, the Chancellor announced that standing charges will be removed from household gas bills, from next year. Fixed costs will apply to the unit rate, instead. Similar reforms will follow for electricity bills, the Chancellor said. He announced in the Budget that the VAT cut on electricity bills back in July, will be extended until July 2027.
A further announcement was made that all households in council tax bands A to D will receive a £100 energy payment from the government this winter. This will be paid directly into bank accounts to help with rising energy costs.
Business rates
Soon after taking their posts, the government announced in July 2026 that business rates for pubs, clubs and live music venues would be cut by 20% from April 2027. In the Budget, Healey announced a change to Small Business Rate Relief for businesses in the retail, hospitality and leisure sectors. The threshold for paying business rates will rise from £12,000 to £18,000.
For other businesses in these sectors, business rates will be frozen in real terms to ensure they do not face an above-inflation rise in the next two years.
Fuel Duty
Diesel and petrol prices have been skyrocketing over recent months, due to global affairs. Fuel duty was cut by 5p in March 2022, a move which was later frozen until 31st December 2026.
With the cost of living still high, however, Chancellor Healey announced in the Budget that the freeze on fuel duty will be extended through the Winter and Spring, until July 2027.
Other announcements
In the Budget, the Chancellor also announced an increase to National Living Wage. From April 2027, it will see an increase of 3.9%.
The Chancellor announced that the Carer’s Allowance “cliff edge” – where the full benefit is lost if the carer earns over the Weekly Earnings Limit – will be scrapped. Instead, a pound-for-pound taper system will be in place. So, for every £1 above the Limit that is earned, the Allowance is reduced by £1, instead of lost in its entirety.
He also announced that tariffs on 100 supermarket products will be suspended. The intention of this is to lower the cost of grocery shopping.
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We hope that this has helped you understand the announcements in the 2026 Autumn Budget, and how it will impact you. If you have any further questions, please don’t hesitate to contact us by calling 0116 222 0119 or emailing hi@willdaywm.co.uk.
