Article What does the Budget 2026 mean for me and my money?

The Chancellor of the Exchequer, John Healey, delivered his first Budget under the Labour government on 28 October 2026.

It’s the first Budget under Prime Minister, Andy Burnham, which the Chancellor said was ‘a budget for the working people of Britain’.

It can be easy to feel confused, or overwhelmed, by the amount of information out there. To help, we’ve summarised the key takeaways from the 2026 Budget – and what it means for you and your money. 

Key takeaways from the 2026 Budget:

1. Cost of living support
2. New Pension Tax Allowance
3. National Minimum Wage and National Living Wage increases
4. Paternity leave for self-employed fathers
5. No cuts to Cash ISA limits
6. First-time buyer ISA announced

First, what is the Budget 2026?

The Budget is an official speech where the Chancellor updates Parliament on the state of the UK economy.

It’s when important decisions are announced that could impact your finances – including potential announcements about changes to your household bills, pensions, and government spending. 

How does it affect me?

The Budget is broadcast to the public. It’s worth taking a look at its key takeaways as it could affect the way you budget today and fund your plans for later life.

How does it affect my pension?

There wasn't a lot of pension news in this Budget – but it was confirmed that the State Pension Triple Lock remains in place. The full new State Pension will increase by 3.9% in April 2027, in line with earnings and higher than inflation.

Here are our 6 key takeaways from the 2026 Budget:

1. Cost of living support

Standing charges from household gas bills will be scrapped by the end of 2027 – with similar reforms to follow for electricity standing charges. A standing charge is a fixed daily amount added to your overall energy costs (regardless of how much energy you use).

Rising energy bills have been recognised as a real worry, so the temporary cuts to VAT on electricity bills from 5% to zero have now been extended from April 2027 until July 2027.

And for the 20 million households in council tax bands A to D, there will be a £100 Household Energy Payment this winter to take the pressure off energy bills in the coldest months. You can check your council tax band on the Gov.uk website.

This’ll be paid directly into bank accounts for help with rising energy bills for eligible households in England, with decisions from Scotland, Northern Ireland and Wales to be decided by local governments.

There’s some help for drivers too, which could help your money go a little further. The 5p fuel duty cut has been extended until July 2027.

2. New Pension Tax Allowance

Pensioners above State Pension Age with incomes at or under the value of the full new State Pension will not be brought into paying tax.

The Pension Tax Allowance will be introduced from April 2027, easing the burden of paying small amounts of tax for those whose incomes are at or just above the Personal Allowance.

The government will be introducing a taper for pensioners whose income is just above the full new State Pension amount.

The Pension Tax Allowance will be withdrawn at a rate of £1 for every £3 of income above the eligibility threshold of £13,037 and will be completely removed when income reaches £13,319.

3. National Minimum Wage and National Living Wage increases

Millions of low-paid workers will benefit from a 3.9% increase to the National Minimum Wage and National Living Wage from April 2027.

The National Living Wage will increase to £13.21 per hour for over-21s – the National Minimum Wage will increase to £11.27 per hour for 18 to 20-year-olds, and to £8.31 per hour for 16 to 17-year-olds and eligible apprentices.

4. Paternity leave for self-employed fathers

Self-employed fathers are now eligible for paid parental leave for the first time.

From April 2029, over 150,000 eligible self-employed fathers, partners and adopters in Great Britain will now benefit from paid parental support.

5. No cuts to Cash ISA limits

There’ll now be no cuts to the amount that under 65s can put into a Cash ISA. The ISA allowance limit will stay at £20,000 per year, and adults of all ages can pay up to £20,000 into a Cash ISA, if they wish. This has reversed plans to reduce it for under 65s (which was announced in the 2025 Budget.)

Healey also commented that he’ll work with the financial services sector on a new Starter ISA – helping to make investment more accessible.

6. First-time Buyer ISA announced

The Budget confirmed that a First-time Buyer ISA will replace the Lifetime ISA (LISA) from April 2029 for new savers.

Savers will receive a 25% government bonus, paid on withdrawal, towards the purchase of a first home worth up to £450,000 – with the maximum value of the bonus capped at £20,000.

Existing LISA holders will still be able to continue contributing to and using their accounts under the current rules.

The government will also reduce the withdrawal penalty from 25% to 20% for existing LISA holders who use their savings to purchase a first home above the property price cap. Healey said if the home you want costs more than the LISA limit, you’ll get back ‘at least what you put in’.

A new ‘Your First Home Scheme’ for first-time buyers was also announced. The scheme will help around 70,000 households in England take their first step onto the housing ladder with up to 20% government equity loans.

Making sense of the headlines

It’s easy to feel overwhelmed and anxious when it comes to reading the news and understanding how major economic events like these can impact you and your future.

Our Money:Mindshift podcast episode on ‘How to read the news’ might help. It explores how the stories we consume shape the way we see the world, our future and our finances. Tune in now on Spotify or Apple Podcasts.

In summary

The Budget 2026 introduces changes that could affect your pay, benefits, and savings.

By understanding these updates – like tax changes, paternity leave, and wage increases – it could help you plan your finances, with your future in mind.