Key points at a glance

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Budget 2026: Key points at a glance

ByBecky Morton

Political reporter
  • Published

Chancellor John Healey has set out the government’s tax and spending plans in his Budget – the first since Andy Burnham became prime minister.

Here is a summary of the main points.

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Energy bills and cost of living help
  • One-off £100 payment for 20 million households in council tax bands A-D in England to help deal with rising energy bills, with equivalent funding for Scotland, Wales and Northern Ireland

  • Standing charges – fixed daily fees customers pay regardless of usage – to be removed from household gas bills in England, Scotland and Wales, with costs added to the unit rate instead

  • VAT cut on electricity bills extended beyond April to July

  • A green levy – the Gas Shipper Obligation to fund hydrogen projects – to be removed from energy bills and put on to general taxation

  • Freeze on fuel duty extended again to July

  • Import taxes to be removed on more than 100 food products, including gherkins and marmalade, as well as kerosene and fertilisers

  • A 55p per mile tax-free mileage rate for those driving up to 10,000 miles for work made permanent, with the rate rising from 25p per mile to 35p above that distance

  • A new scheme taking 25% off electricity bills for 10,000 firms to launch in April, with payments backdated for energy costs this year

Wages, benefits and pensions
  • A new tax-free allowance for low-income pensioners, to ensure those with income up to the value of the full new State Pension will not pay income tax

  • Legal minimum wage to rise by 3.9% in April

  • Unpaid carers will no longer lose their entire Carer’s Allowance if they earn more than £204 a week after tax, with a taper rate introduced instead

  • Parental pay extended to self-employed fathers and parents in same-sex couples

Business taxes
  • Surcharge banks pay on their profits to rise from 3% to 6% for 15 months, starting in January

  • Threshold at which High Street shops start paying business rates in England to be increased from £12,000 to £18,000, meaning businesses would pay no rates on properties with a rateable value below this level

  • Adult games centres and vape shops will not qualify for business rates relief

  • Taxes on gambling machines to rise from 20% to 25% for higher stakes machines

  • Requirements for online marketplaces like Amazon, eBay and Temu to be strengthened to prevent sellers using their platforms avoiding paying VAT

Housing and property
Devolution
  • All business rates to be retained locally by the end of the decade, with mayors to keep 20% of revenue from next year

  • A share of income tax receipts to go to mayors from 2028

  • Regional bodies and mayors in England to get greater powers over spending, starting with £285m next year for things like housing, transport and High Streets

  • Government to work with mayors to design a £1.5bn borrowing facility, enabling investment in larger projects

Defence
  • Defence Investment Plan to be fully funded by reprioritising budgets across government, after Sir Keir Starmer only committed £10.3bn for the £15bn plan

  • Details of how the government will meet a Nato commitment to spend 3.5% of GDP on defence by 2035 to be set out at next year’s Spending Review, with a target date for 3% in 2030

  • Extra £10bn of economic and military support for Ukraine

Other measures
  • Amount people can put into tax-free cash Isas (Individual Savings Accounts) to remain at £20,000 a year, with plans to lower the limit to £12,000 for under-65s scrapped

  • More than £600m of investment in projects related to artificial intelligence (AI), including an extra £120m for the UK’s AI Security Institute and £100m for a national AI Biosecurity Lab

  • Fund to tackle misogyny in schools, at work and in communities to get £15m

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