What are the key takeaways from the UK budget 2026

The UK budget was discussed today and set out a series of measures to ease the cost of living, support businesses, and boost economic growth across the UK

Chancellor John Healey announced plans to cut household energy bills, extend fuel duty cuts, raise the National Living Wage and invest billions in housing, industry and national security.

The UK budget hopes to provide immediate financial relief while also laying the foundation for long-term economic stability and growth.

Help with energy bills and everyday costs

Households are set to benefit from a £100 Household Energy Payment in 2027, available to eligible homes in England, with similar support planned for the rest of the UK. The temporary VAT cut on electricity bills will also be extended until 1 July 2027, further reducing bills.

The Government plans to reform the energy system to make costs more affordable over the next decade. Proposals include asking Ofgem to abolish gas standing charges and move these costs into unit rates.

Drivers will also benefit from an extension of the 5p fuel duty cut for another six months, with the planned increase delayed until July 2027 and aligned with inflation.

The National Living Wage will rise by 3.9% to £13.21 an hour from April 2027, increasing annual gross earnings for a full-time worker on the minimum rate by around £910.

Supporting housing and high streets

The UK budget included an additional £1.5 billion for social and affordable housing. This will bring planned capital investment over the next decade to more than £40 billion.

A new First Time Buyer ISA will offer another way for aspiring homeowners to save for a deposit. At the same time, changes to Lifetime ISA withdrawal charges will reduce the penalty for first-time buyers purchasing properties above the existing £450,000 price cap.

High street businesses will receive support through changes to business rates. Retail, hospitality and leisure properties in England will benefit from measures including real-terms freezes, reductions or zero business rates, with around half of these properties expected to pay nothing.

Investment to boost jobs and innovation

The Government will invest in British industry, technology and innovation, including a £2.5 billion, 10-year programme with Rolls-Royce to develop next-generation aerospace technology.

The Government will also invest a further £700 million to support the UK’s artificial intelligence plans, including AI security, home-grown companies, and local adoption.

Lucy Kemp, Chief Marketing Officer at La Fosse, comments:

“Researching AI’s impact on jobs makes sense, but it needs to go hand in hand with action. AI moves so fast that by the time a study is finished, the picture will have changed, so we need to learn as we go.”

“Entry-level jobs are harder to find right now, and when young people do land one, their pay is rising more slowly than before. It’s a double blow. I think the entry-level market will recover, but in the meantime we need to give this generation real reasons to feel positive about work.”

The National Wealth Fund and British Business Bank will receive an additional £20.4 billion to encourage investment, support businesses and help create or sustain an estimated 140,000 jobs.

Changes to tax and public spending

Although the Government has said most individuals and businesses will be protected from tax increases, rates on savings and property income will rise by two percentage points from April 2027.

The UK budget also commits £15 billion to defence investment, including previously unfunded commitments, alongside more than £10 billion in additional economic and military support for Ukraine.

The Government says its plans are fully funded and that it will maintain its fiscal rules, with £15 billion of headroom against its stability rule in 2029–30.