Autumn Budget 2026: what changes did John Healey announce?

The Chancellor announces help with energy bills and scraps the cash Isa allowance cut, but raises income tax for savers and landlords

John Healey has unveiled his first Autumn Budget, announcing help with energy bills and a U-turn on forthcoming cash Isa allowance cuts.

The new Chancellor described it as a Budget for ‘the working people of Britain’, promising to give households ‘breathing space’ from the cost of living while steering the country through ‘global economic storms’.

But there was bad news for savers and landlords who now face a four percentage point tax hike on income from April.

Here, we take a closer look at what was included in the speech, and how it will affect your finances.

Autumn Budget 2026: the key changes

The Treasury was surprisingly tight-lipped about what might be included in the announcement, leading to predictions that it would be a ‘boring’ Budget that played it safe.

One thing the government said it was keen to focus on was cutting the cost of living and many of the changes announced are intended to alleviate the financial pressure many households are currently feeling.

Now the wait is finally over, we run you through what was announced and how it will affect your finances:

Energy

As winter begins to bite, Healey announced a raft of measures to help people manage soaring energy bills:

£100 one-off payment

Healey said he is giving a £100 one-off payment to 20 million households in council tax bands A to D.

It will be paid directly into bank accounts to help with rising energy bills from January 2027.

Gas standing charges scrapped

The Chancellor announced that standing charges will be removed from household gas bills, with fixed costs shifted onto the unit rate. The government estimates 60% of households will save an average of £45 a year.

It means you would only pay for gas you use rather than a daily connection fee (payable even if you use no gas). However, energy firms will likely increase the price they charge per kWh to recoup the costs.

So while those who use little gas might be better off, high household gas users on a low income could struggle.

VAT cut on electricity

The Chancellor will also help households with electricity costs by maintaining the current VAT cut on these bills to July 2027.

VAT was reduced to zero on electricity on 1 October 2026, but was due to revert back to 5% on 31 March 2027.

It’s expected to take around £50 off the annual Ofgem price cap in April 2027.

Savings and investment

Cash Isa U-turn

A cut to the amount you can save in a cash Isa – due to come into force from April 2027 – will now be reversed.

The original plan, unveiled by the previous Chancellor Rachel Reeves in last year’s Autumn Budget, meant the tax-free cash Isa allowance would have dropped from £20,000 a year to just £12,000 for savers under 65. The overall Isa allowance of £20,000 would have stayed the same, but only if £8,000 of it is held in a stocks and shares product.

That’s now been scrapped entirely and adult savers of all ages can continue to stash up to £20,000 in cash Isas.

The move is expected to be greeted warmly by banks — which now face higher taxes — and building societies, which rely heavily on deposits in Britain’s most popular savings product to fund their mortgage lending.

New investment Isa ‘incentive’

The now-scrapped cash Isa allowance cut was intended to encourage more people to invest. However, critics argued that many people were too nervous about the risks involved in putting their money into stocks and shares Isas.

The government says it is exploring a way to offer a new incentive for people investing in a stocks and shares Isa for the first time. Details on what that might actually look like have yet to be announced.

For stocks and shares Isas, this also means the scrapping of ‘anti-circumvention rules’ planned to prevent people using stocks and shares Isas for cash.

The planned 22% tax on all interest made from uninvested cash in a stocks and shares Isa will no longer go ahead. Any cash held in a stocks and shares Isa will continue to be tax-free.

Property and savings tax hike

When you earn interest above a certain amount, it’s subject to income tax. Previously, the thresholds for tax on savings interest and property income (for example, earned by landlords through rent) were the same as those for other forms of income (in England, Wales and Northern Ireland), such as employment or a pension.

Last autumn, however, the government announced it would raise the rate of income tax on savings interest and property income by two percentage points from April 2027.

Healey has now gone even further in his Budget, hiking rates by a further two percentage points in the spring.

The amount of tax charged on interest earned above the personal savings allowance and the property allowance will therefore increase as follows:

Basic-rate taxpayers from 20% to 24%
Higher-rate taxpayers from 40% to 44%
Additional-rate taxpayers from 45% to 49%

Property

New first-time buyer home scheme

A new scheme for first-time buyers has been announced that will allow people to buy a new-build home with a minimum deposit of just 2.5%.

Under the proposed Your First Home scheme, eligible buyers in England can access a government-backed equity loan worth 20% of the property’s value to help fund their purchase. The loan will also have an initial interest-free period.

Based on Rightmove’s average asking price of £225,199 for a typical first-time buyer home, a 2.5% deposit would be around £5,630, while a 20% equity loan would be worth around £45,040.

It will be open to first-time buyers purchasing a new build, with price caps set based on the local authority median prices. The inner and outer London caps will be £650,000 and £500,000 respectively. Households with an income above £110,000 (£140,000 in London) will not be eligible.

The new scheme will open for pre-registration by the end of December 2026, and full applications will open from February 2027. The first loans are expected to be issued from April 2027.

New Isa for first-time buyers

The Lifetime Isa will be officially replaced by a new tax-free product called a First Time Buyer Isa from April 2029.

People building a pot to buy their first home will still be able to save £4,000 a year tax-free, with a 25% government bonus.

The new product will have no upper age restriction and the bonus will be paid on the value of the account balance when funds are withdrawn for a qualifying first home purchase, up to the value of £450,000.

Lifetime Isa penalty reduced

In a more immediate move, the government will cut the lifetime Isa penalty if you buy your first home above the £450,000 limit. Currently, if you purchase a home above the threshold, you will incur a charge of 25% on the balance of the lifetime Isa.

From midnight on 29 October, savers who use a lifetime Isa to buy their first home above the £450,000 threshold will incur a reduced penalty of 20% of their lifetime Isa balance.

The charge for unauthorised withdrawals from a lifetime Isa will remain at 25%.

Tax and benefits

Personal tax thresholds frozen for most

Income tax thresholds will remain frozen until 2031, leaving the tax-free personal allowance locked at £12,570 and the higher-rate threshold at £50,270.

However, to cushion retirees, the government is introducing a new Pension Tax Allowance (PTA) to offset the impact of the rising full new state pension.

Chancellor John Healey did not mention income tax thresholds once during his Budget speech to Parliament, keeping the fact that the bands are remaining frozen fairly quiet.

New personal allowance for state pensioners

A new Pension Tax Allowance (PTA) will be introduced from 6 April 2027 to prevent some pensioners from having to pay income tax on their state pension for the first time.

The new allowance will be calculated by applying the basic rate of income tax (20%) to the difference between the full new state pension and the personal allowance.

For those with incomes just above the value of the full new state pension, the allowance will be gradually withdrawn through a taper.

The PTA will apply from 6 April 2027 until 5 April 2030 and will be uprated each year in line with the annual increase in the state pension.

Carer’s Allowance cliff-edge abolished

The Carer’s Allowance ‘cliff-edge’ is being replaced with a gradual taper system so earning slightly more no longer cuts off all support.

Currently, unpaid carers lose their entire benefit if they earn even 1p over the net weekly earnings limit of £204. This limit applies to income after deducting tax, National Insurance, and other expenses such as pension contributions.

Under the new rules, carers will instead lose £1 of support for every £1 earned above the threshold.

Cost of living

Tariffs removed on household goods

The government is scrapping import tariffs on more than 100 goods, covering household favourites such as baked beans, chocolate and gherkins, alongside fertiliser for farmers and kerosene heating oil.

Combined with earlier cuts on staples like pasta, tuna and fruit juice, the Treasury estimates the measures could save families up to £21 a year on groceries, although this will depend on how much of the savings businesses pass on to shoppers.

Prescription charge freeze

NHS prescription charges in England will remain at £9.90 for another year after the government announced a freeze for 2025-26. The price of prepayment certificates is also staying the same.

No changes were announced to medications that are currently free. That includes contraceptives and drugs administered to patients in hospital.

You may also qualify for free prescriptions due to your age, your income and whether you receive certain means-tested benefits, and if you have certain medical conditions.

Transport

Fuel Duty rise cancelled

Rates on fuel duty – a tax included in the price you pay for petrol, diesel and other fuels – will be frozen at its current rate until July 2027.

It means the temporary 5p per litre cut, first introduced in 2022, will remain.

Permanent mileage rate increases

The government is permanently setting the tax-free mileage rate at 55p per mile for the first 10,000 miles you drive for work, and increasing the rate after that from 25p to 35p.

This policy sets how much employers can pay back to their staff tax-free – or how much self-employed workers and employees can claim in tax relief – when using their own car for business travel.

The government said this will help around three million workers, such as nurses, care workers, and tradespeople, cover high petrol and maintenance costs, saving drivers roughly £120 to £300 a year.

Help for workers and self-employed

Rise in minimum and national living wage

Workers earning the national minimum wage and the national living wage will see their pay increase by 3.9% from April 2027.

It means the national living wage – paid to people aged 21 and over – will increase to £13.21 per hour. The national minimum wage for 18- to 20-year-olds will go up to £11.27 per hour.

Trading allowance boost

The government is tripling the Trading Allowance from £1,000 to £3,000 from 6 April 2027.

This is the tax-free exemption for workers with small amounts of self-employment, casual, or miscellaneous income (such as side hustles or freelancing).