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Autumn Budget 2026: A summary

The Chancellor of the Exchequer, John Healey, presented his 2026 Autumn Budget to Parliament on 28 October and published supporting documents on the gov.uk website.

When the Chancellor finished his statement in the Commons, the Office for Budget Responsibility (OBR) published updated forecasts for the UK’s economic and fiscal outlook. The OBR is the independent public finances watchdog that produces the official forecasts for the economy and public finances used by the Chancellor.

The Chancellor said that the 2026 Autumn Budget is “for the working people of Britain. It’s a Budget for business, big and small” which is “built on fiscal discipline”.

Selected announcements

Personal taxes

In April 2027, the income tax rates on property and savings income will be 24% for the basic rate, 44% for the higher rate, and 49% for the additional rate.

A new Pensions Tax Allowance will be introduced in April 2027. The allowance will be the annual amount of the new State Pension.

Business rates

In 2027/28 and 2028/29, small business rate relief in England will be more generous for retail, hospitality and leisure (RHL) properties than non-RHL properties.

In April 2027, relief for pubs, social clubs and live music venue will increase from 15% to 35% for “all but the very largest music venues”.

Gambling taxation

Machine games duty for machines with stakes over £1, or with prizes exceeding £100, will be increased to 25% from April 2027.

Bank corporation tax surcharge

For 15 months from 1 January 2027, the bank corporation tax surcharge will be increased by 3 percentage points, to 6%, in addition to headline corporation tax.

Tax gap

Several measures are being introduced to reduce the tax gap by increasing HMRC compliance activity. The tax gap measures the difference between how much money in tax the government is theoretically due, and what it receives.

This includes introducing timely payment for self-assessment, bringing more payments for self-assessment into the tax year when the money is actually earned.

Motoring taxes

Fuel duty will continue to be frozen until 1 July 2027. On this date the 5p temporary cut would be fully reversed, and the rates would also increase in line with RPI inflation.

Energy

A £100 Household Energy Payment will be paid to households in England in council tax bands A to D, from January 2027.

Gas standing charges will be removed. Ofgem has been asked to remove standing charges on household gas bills by the end of 2027 or as soon as possible after that.

The zero rating of VAT on domestic energy will be extended until July 2027. 

Housing

An extra £1.5 billion has been made available for the Social and Affordable Homes Programme to deliver around 10,000 homes in England, prioritising those for social rent, particularly council homes.

A new First Time Buyer ISA will be introduced from April 2029 to help first-time buyers save for a deposit.

Your First Home will provide equity loans to help first-time buyers purchase a new-build home with a smaller deposit and mortgage.

An additional £432 million was announced for 2027/28 and 2028/29 to help those sleeping rough in England find a route off the streets.

Carer’s allowance

The weekly earnings limit for carer’s allowance will be reformed so that carers will no longer lose all their benefit if they exceed the limit by a small amount.

Minimum wage

In April 2027, the rates of the National Living Wage and the National Minimum Wage will increase by 3.9%, in line with the recommendations of the Low Pay Commission.

English devolution

The government published a fiscal devolution roadmap alongside the Budget. It sets out the government’s plans for reforming how mayors and other parts of regional government in England are funded.

Mayors will receive 20% of business rates revenue from the 2027/28 financial year. This will replace other funding. They will then receive a share of revenues from the basic rate of income tax in their area from 2028/29.

Public spending

Public spending is higher in the OBR’s latest forecast than it was in March 2026, largely because of increased forecast inflation and its effects on debt interest spending and welfare spending.  

Departmental spending in the last years of the forecast will be set in the 2027 Spending Review, but the OBR estimates some department’s budgets may need to be cut if the government keeps its current commitments to certain areas of spending, such as increasing defence spending as a proportion of GDP. 

The OBR’s economy forecast

The effects of the conflict in the Middle East – largely related to higher energy costs – can be seen in the OBR’s new forecasts for the UK economy.

The OBR lowered its forecast for GDP growth in 2027 from 1.6% (in its March 2026 forecast) to 1.0%, while raising its forecast for inflation from 2.0% to 3.4%. The OBR said policy measures taken at the Budget had little effect on its GDP and inflation forecasts.

The OBR forecasts inflation to fall to 2% from 2028 on the assumption that energy prices decline by then. GDP growth is forecast to pick up to average 1.7% per year from 2028 to 2031, a little higher than the OBR expected in March.

The OBR lowered its forecasts for how much living standards will rise in the coming years. On a per person basis, adjusted for inflation, household incomes are expected to be only around 2% above their pre-pandemic level by early 2032.

The OBR’s public finances forecast

Government borrowing

The Office for Budget Responsibility (OBR) forecasts that government borrowing will decrease from £134 billion in 2025/26 to £68 billion in the final year of the OBR’s current forecast period (2031/32).

The OBR forecasts that borrowing from 2026/27 to 2030/31 will be around
£13 billion higher a year, on average, compared with its March 2026 forecast.

Much of the additional borrowing is because the OBR expects underlying borrowing to be higher. The Chancellor’s decisions increase borrowing in the early years of the forecast and decrease it in the later years.

Government debt

Government debt was equivalent to 93.2% of GDP at the end of 2025/26. The OBR forecasts that government debt will increase to 97.3% at the end of 2028/29. It will then fall to around 95.6% of GDP at the end of 2031/32.

The fiscal rules

The government has targets for its day-to-day budget and its net financial debt in 2029/30, widely known as the Chancellor’s ‘fiscal rules’.

The OBR assessed that both rules were being met in its forecast.

The first rule says that the current budget (for day-to-day spending) must be in surplus in 2029/30.

The government is forecast to meet this target by a margin of 0.4% of GDP (£15 billion) in 2029/30, compared with a margin of 0.6% of GDP in the March 2026 forecast.

The second fiscal rule says that public sector net financial liabilities (PSNFL), expressed as a percentage of GDP, should be falling in 2029/30, compared with the previous year.

The government is forecast to meet this target by a margin of 0.7% of GDP (£24 billion) in 2029/30.