UK Autumn Budget 2026: Healey lifts minimum wage to £13.21, gives £100 energy payment
Chancellor John Healey's first Budget leaves income tax rates unchanged but raises the minimum wage 3.9%, sends £100 to 20 million households, scraps the cash ISA cut and launches £4.7bn of first-home loans.
At a glance
- Chancellor John Healey delivered his first Autumn Budget on Wednesday, October 28, 2026, leaving headline income tax and National Insurance rates unchanged but keeping thresholds frozen until 2030/31.
- The National Living Wage rises 3.9% to £13.21 an hour from April 1, 2027; about 20 million households in council tax bands A–D in England get a £100 energy payment from January.
- The planned cut to the cash ISA limit is scrapped, a £4.7bn 'Your First Home' equity loan scheme starts in April 2027, and the 5p fuel duty cut and 0% VAT on household electricity run to July 2027.
- Tax on savings and property income rises by 2 points from April 2027, and the bank surcharge doubles from 3% to 6% for 15 months to help pay for energy support.
- The Office for Budget Responsibility raised its 2026 growth forecast to 1.2% and expects inflation to peak at 3.8% in early 2027.
Britain's Chancellor John Healey presented his first Autumn Budget to Parliament on Wednesday, October 28, 2026, promising households "breathing space" from rising living costs. He left headline income tax and National Insurance rates untouched, raised the minimum wage by 3.9% to £13.21 an hour, announced a £100 winter energy payment for about 20 million homes and scrapped a planned cut to the cash ISA allowance — while raising taxes on savings, property income and banks.
What the Budget contains
Healey described the package as "built on fiscal discipline". The main measures for households and businesses are:
| Measure | What changes | From |
|---|---|---|
| National Living Wage | Up 3.9% to £13.21/hour; 18–20 rate £11.27 | April 1, 2027 |
| Income tax and NI | Rates unchanged; thresholds frozen | Until 2030/31 |
| Savings and property income tax | Up 2 points to 24% / 44% / 49% | April 2027 |
| Household energy payment | £100 for ~20m homes in council tax bands A–D (England) | January 2027 |
| VAT on household electricity | 0% extended | To July 2027 |
| Fuel duty | 5p cut extended | To July 2027 |
| Cash ISA | Planned £12,000 cap dropped; limit stays £20,000 | — |
| "Your First Home" loans | £4.7bn; up to 20% loan, 2.5% deposit, interest-free 5 years | April 2027 |
| Bank surcharge | Doubles from 3% to 6% for 15 months | January 2027 |
| Trading allowance | Rises from £1,000 to £3,000 | April 2027 |
| High-value council tax surcharge | £2,500–£7,500 a year on homes worth £2m+ | April 2028 |
Pensioners whose total income is no higher than the full new state pension will pay no income tax from April 2027 to April 2030 under a new allowance — important because the state pension is set to rise above the £12,570 personal allowance. The triple lock is kept until April 2029.
On energy, Ofgem is being asked to abolish gas standing charges, which cost a typical household about £108 a year, by the end of 2027, with the cost moved onto unit prices. Healey called the charges "unfair and outdated". More than 10,000 energy-hungry manufacturers get a 20–25% cut in electricity bills from April 2027.
Other measures include a 6% cap on interest for Plan 2 and Plan 3 student loans until August 2027, the suspension of tariffs on more than 100 imported foods until December 2028, larger business-rate relief for small shops, pubs and music venues, and about £700m for artificial intelligence, cyber defence and AI safety, including £120m for the AI Security Institute.
The economy in numbers
The Office for Budget Responsibility (OBR), the independent forecaster, published its outlook alongside the Budget.
| OBR forecast | Figure |
|---|---|
| GDP growth 2026 | 1.2% (up from 1.1% in March) |
| GDP growth 2027 | 1.0% |
| Inflation peak | 3.8% in early 2027 |
| Borrowing 2026/27 | 4.2% of GDP |
| Borrowing 2031/32 | 1.8% of GDP |
| Debt interest | ~£14bn a year more than March forecast |
Background
Healey, a former defence secretary, is delivering his first Autumn Budget and is working within the government's self-imposed fiscal rules at a difficult time: the war involving Iran has pushed up energy prices and government borrowing costs, and UK inflation rose to 3.5% in September. Much of the Budget is aimed at keeping energy bills down while finding revenue from groups seen as better able to pay, such as banks, landlords, savers and owners of the most expensive homes.
On defence, Healey confirmed the remaining £4.7bn of a £15bn Defence Investment Plan will come from reprioritising capital budgets, including a 1% cut in departments' capital spending. He said the path to defence spending of 3% of GDP by 2030 and 3.5% by 2035 will be set out at next year's spending review.
Reactions
Conservative leader Kemi Badenoch criticised the Budget's focus on "tiny bits of micro-policy". Ruth Curtice, chief executive of the Resolution Foundation think-tank, said the chancellor had "missed the mark" with poorly targeted support, estimating that one in eight lower-income households live in higher council tax bands and will miss out on the £100 payment.
The End Fuel Poverty Coalition welcomed the end of gas standing charges but warned that millions of homes would not see savings, while Carers UK welcomed reform of Carer's Allowance, which will taper off gradually instead of stopping at an earnings limit from 2030/31. Fund managers welcomed the absence of a broad rise in business taxes; defence shares Rolls-Royce and BAE Systems were little changed.
Why it matters
For UK workers on the lowest pay, the rise to £13.21 an hour adds about 50p an hour, or close to £1,000 a year for someone working 37.5 hours a week. Savers and landlords face higher tax bills from 2027, while first-time buyers in England gain a new route to a deposit of just 2.5%. For the hundreds of thousands of British Pakistanis and other South Asian families in the UK — many working in retail, hospitality and care on or near the minimum wage, or running small shops — the wage rise, the business-rate relief and the energy payment are the most direct changes.
What happens next
Most tax measures must pass through Parliament in the Finance Bill in the coming months, and details may change. The energy payment arrives from January 2027, the new minimum wage and most tax changes take effect in April 2027, and the government's next spending review in 2027 will set out departmental budgets and the defence spending path.
Questions people are asking
What is the UK minimum wage from April 2027?
The National Living Wage for workers aged 21 and over rises 3.9% to £13.21 an hour from April 1, 2027, and the rate for 18–20-year-olds rises to £11.27. The government says about 2.3 million workers will benefit.
Who gets the £100 energy payment in the 2026 Budget?
About 20 million households in England in council tax bands A to D will receive £100 from January 2027, at a cost of £2.6bn. Scotland, Wales and Northern Ireland receive funding to offer similar support.
Did the Autumn Budget 2026 raise income tax?
Headline income tax rates and the £12,570 personal allowance are unchanged, but thresholds stay frozen until 2030/31, which pulls more people into higher bands as wages rise. Tax on savings and property income goes up by 2 percentage points from April 2027, to 24%, 44% and 49%.
