Autumn Budget 2026

Chancellor John Healey’s first Budget was a relatively low-key affair, with far less speculation beforehand compared to previous Budgets (particularly that of his predecessor, Rachel Reeves).

Against the backdrop of an increasingly tumultuous geopolitical environment, Healey focused on addressing living costs through a headline-grabbing £100 payment for English households to help cover rising bills, along with an increase to the National Minimum Wage.

For savers, the Budget presented a mixed picture. On one hand, the decision to abandon the proposed reduction to the Cash ISA annual allowance for under-65s brings welcome stability. On the other hand, a 4 percentage point increase in tax rates on non-ISA savings interest across all tax bands means many individuals will pay more on interest earned above their Personal Savings Allowance.

Read on for a detailed breakdown of the main announcements and what they mean for your personal finances.

Cash ISA Allowance Remains at £20,000 for Under-65s

In a welcome surprise, the Government has abandoned plans to reduce the annual Cash ISA allowance for under-65s. The limit remains at £20,000 per tax year, providing stability for savers with no further changes anticipated.

Last year's proposal to lower the cap to £12,000, intended to encourage investment in stocks and shares, drew a mixed reaction given the enduring popularity of Cash ISAs. Healey’s decision to reverse this policy will bring relief to many savers.

Starting 6 April 2027, tax rates on interest earned from non-ISA savings accounts will rise by four percentage points across all tax bands.

Your Personal Savings Allowance (PSA) remains unchanged: basic-rate taxpayers can still earn up to £1,000 in interest tax-free, while higher-rate taxpayers can earn up to £500.

Additional-rate taxpayers do not receive a Personal Savings Allowance.

Once your total savings interest exceeds your allowance, the updated rates apply:

A new First-Time Buyer ISA will launch in 2029 to succeed the current Lifetime ISA (LISA).

The new scheme is designed specifically to help aspiring homeowners build a deposit for their first property purchase. Detailed transition arrangements for existing Lifetime ISA account holders, including bonus transfer rules and withdrawal terms, will be set out by HM Treasury ahead of the formal rollout.

Household Energy Payments and Gas Standing Charges

English households living in properties banded A to D for council tax will receive a direct £100 payment into the bank account they use to pay council tax to help offset winter utility bills. Devolved administrations in Scotland, Wales, and Northern Ireland will receive an allocation from the UK Government to deploy equivalent support schemes if they wish to. 

Independent market estimates suggest average annual energy bills could climb by up to £400 this winter, meaning the £100 credit covers roughly one quarter of anticipated increases.

In addition, gas standing charges will be removed from domestic tariffs. This change is projected to save approximately 60% of households an average of £45 per year. However, because energy suppliers will shift these fixed costs into unit rates, households with higher gas consumption may experience higher overall bills.

The temporary 5p per litre reduction in fuel duty, originally introduced in 2022, has been extended until July. This prevents an immediate rise in transport and commuting fuel costs.

The bank corporation tax surcharge will rise to 6%, a slightly lower increase than anticipated.

National Minimum Wage and State Pension Increases

Statutory pay rates will rise by 3.90% from April 2027. The updated hourly minimum wage thresholds are:

• Ages 21 and over (National Living Wage): £13.21 per hour (up from £12.71)
• Ages 18 to 20: £11.27 per hour
• Ages 16 to 17: £8.31 per hour

The state pension will also rise by 3.90%, matching average earnings growth under the Triple Lock policy. The full flat-rate state pension increases to £250.70 per week, while the basic state pension rises to £192.10 per week.

While this increase brings the total state pension income closer to the standard UK Personal Allowance (£12,570 per year), the government confirmed that individuals whose only income is the state pension will not pay income tax on that pension.