Chancellor John Healey presented the UK’s 2026 budget on Thursday, marking his first set of tax and spending proposals since Prime Minister Andy Burnham took office. The package contains a mix of relief measures, tax adjustments and new investment programmes aimed at supporting households, local authorities and emerging technology sectors.
Households will receive a one‑time £100 payment if they fall into council tax bands A‑D in England, with equivalent sums earmarked for Scotland, Wales and Northern Ireland. The move is intended to offset the rising cost of energy. In line with this, standing charges on household gas bills will be removed, with the cost added to the unit rate. Electricity bills will see a VAT cut extended until July, while fuel duty is frozen through the same period.
Import duties on more than 100 food items—including gherkins, marmalade, kerosene and fertilisers—will be abolished. A new tax‑free mileage allowance of 55p per mile will be made permanent for drivers covering up to 10,000 miles a year, with the rate rising to 35p for longer distances.
Income‑tax relief will expand to low‑income pensioners, ensuring those earning up to the full new State Pension are exempt. The legal minimum wage will rise by 3.9%, while unpaid carers will no longer lose their entire Carer’s Allowance if they earn over £204 a week after tax; a tapering rate will apply instead.
Parental leave will extend to self‑employed fathers and same‑sex couples. Banks will face a surcharge on profits that will increase from 3% to 6% for 15 months, starting in January.
Business‑rate reforms will see the threshold for High Street shops in England rise from £12,000 to £18,000, meaning smaller retailers will pay no rates. Adult game centres and vape shops will lose business‑rate relief, and taxes on high‑stakes gambling machines will climb from 20% to 25%. Online marketplaces such as Amazon, eBay and Temu will be subject to tighter rules to prevent VAT evasion.
Housing and social‑care spending will receive a boost, with an extra £1 bn added to the 10‑year social and affordable‑housing programme, taking total funding to over £40 bn. Rough sleepers will benefit from a £432 m programme aimed at providing a route off the streets by Christmas. All business rates will be retained locally by the end of the decade, with mayors keeping 20% of the revenue from next year.
From 2028, a share of income‑tax receipts will be allocated to mayors, and regional bodies will gain greater powers over spending. The first tranche of £285 m will fund local projects such as housing, transport and High Street regeneration. The government will also collaborate with mayors to design a £1.5 bn borrowing facility for larger investments.
Investment in artificial intelligence will top £600 m, including £120 m for the UK’s AI Security Institute and £100 m for a national AI Biosecurity Lab. A £15 m fund will tackle misogyny in schools, workplaces and communities.
