Budget 2026: what it means for households

Tax thresholds frozen

The GOV.UK Budget annex on rates and allowances (Annex A) states that the Personal Allowance is £12,570 in both the 2026-2027 and the 2027-2028 tax years. The basic rate band covers the first £37,700 of taxable income, the higher rate applies up to £125,140, and the additional rate applies to income above that.

The main Budget document says that National Insurance thresholds will remain at their 2026-2027 levels until the 2030-2031 tax year. The exceptions are the Lower Earnings Limit and the Small Profits Threshold: these will rise from April 2027.

When thresholds are frozen and wages rise, a larger share of income is taxed at a higher rate (our explanation).

Savings and rental income: from 6 April 2027

The GOV.UK Budget annex states that in the 2026-2027 tax year savings income (for example, interest) is taxed at rates of 20%, 40% and 45%. From 6 April 2027 they will be 24%, 44% and 49%. The savings rates apply across the UK. The same rates will also apply to property income in England, Wales and Northern Ireland from the 2027-2028 tax year; the Budget document states that the Scottish and Welsh governments will be able to set their own property income rates.

ISAs and the Lifetime ISA

• The cash ISA limit remains £20,000 from April 2027 for everyone aged over 18. According to MoneySavingExpert, the previously planned cut in the limit to £12,000 for those under 65 has been scrapped.
• Lifetime ISA: the penalty for withdrawing money when buying a home priced above the set limit is being cut from 25% to 20%. The Budget document states that the change applies from 29 October, while the HM Treasury press release published on 28 October says that it applies “from today”.

Fuel duty

According to the Budget documents, the 5p per litre cut in fuel duty has been extended to 30 June 2027. Until then, duty on petrol and diesel remains at 52.95p per litre. From 1 July 2027 it will be 60.59p per litre.

For the self-employed and small businesses

• The trading allowance will rise from £1,000 to £3,000 from 6 April 2027.
• Small Business Rates Relief. A document of 2 November from the Ministry of Housing, Communities and Local Government (MHCLG) states that from April 2027 in England, retail, hospitality and leisure premises will receive 100% relief where the rateable value of the premises does not exceed £18,000 (previously £12,000), and tapered relief up to £21,000 (previously £15,000). The Ministry estimates that around 70,000 more businesses will no longer pay business rates. The document does not say whether hairdressers, beauty salons or takeaways fall into this category.

What is worth checking

• If you have savings outside ISA accounts or you let out property, remember that the rates will rise from 6 April 2027.
• If you have business premises in England, check their rateable value.
• The reliefs described in the MHCLG document apply to England. The document does not say whether there will be similar changes in Scotland, Wales and Northern Ireland.

Based on: the GOV.UK Budget document “Budget 2026: overview of tax legislation and rates” and its Annex A (28 October 2026, updated 30 October); the HM Treasury press release “Budget 2026: breathing space for today, hope for the future” (28 October 2026); the MHCLG document “Hope on the High Street” (2 November 2026); the MoneySavingExpert Budget overview (28 October 2026, edited 2 November).

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