Reiterating Labour’s message for ‘growth in every postcode’, the Chancellor of the Exchequer, John Healey, delivered his first Budget on 28 October 2026.

A further two percentage point increase was announced to the Income Tax rates for property and savings income from April 2027. The rates applicable to property and savings income from 2027/28 will be 24% in the basic rate band, 44% in the higher rate band and 49% in the additional rate band. No changes were announced to other Income Tax rates. The freeze of the Income Tax Personal Allowance, higher rate threshold and additional rate threshold will remain until 5 April 2031.

The annual cash Individual Savings Account (ISA) subscription limit will be retained at £20,000 from 6 April 2027 (it was previously expected to reduce to £12,000 from this date). A new First Time Buyer ISA will be introduced from April 2029.

The new State Pension will increase to £13,037 from 6 April 2027 which is above the Personal Allowance. The government will introduce a Pension Tax Allowance in order to avoid recipients of the State Pension having to pay small amounts of tax.

From 1 April 2027, the National Living Wage will increase by 3.9% to £13.21 per hour. The National Minimum Wage for 18-20 year olds will also increase by 3.9% to £11.27 per hour and to £8.31 per hour for 16 to 17-year-olds and eligible apprentices.

In May 2026, the government announced a temporary 55p per mile rate for the first 10,000 business miles in a private vehicle which applied retrospectively from 6 April 2026. This has now been made permanent. In addition, the government is also increasing the rate above 10,000 business miles from 25p to 35p from 6 April 2027. Simplified mileage rates for self-employed individuals will be set at the same level.

The government is reducing the lifetime limit for capital gains eligible for Business Asset Disposal Relief (BADR) from £1 million to £500,000 for disposals made from 6 April 2027. For qualifying founders of high-growth, innovative companies, a new Founders’ Relief will be introduced from 6 April 2027, offering a reduced 10% Capital Gains Tax rate on up to £10 million of lifetime gains.

The main rate of Writing Down Allowances will be reduced by two percentage points from 14% to 12% from April 2027. The main rate First Year Allowance (FYA) will be increased from 40% to 50% for expenditure incurred on or after 1 January 2027.

The government will launch an expanded Enterprise Management Incentive 2 (EMI2, formerly Company Share Option Plan). EMI2 will double the value of tax-advantaged options employees can hold from £60,000 to £120,000 from 6 April 2027 and the exercise period will be extended from 10 to 15 years.

For the self-employed, the Trading Allowance will be tripled from £1,000 to £3,000 from 6 April 2027.

This Budget extended the temporary 0% rate of VAT on qualifying domestic electricity supplies in Great Britain for another three months, until July 2027.

A further £2.6 billion of support will be provided through the Household Energy Payment, with up to 20 million households in England receiving a direct £100 payment from January 2027 delivered through the council tax system.

Mr Healey said that:

‘My choice in the Budget today is to give families and businesses some breathing space now, and to begin the radical reform of energy to reduce bills in the future’.

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