Budget 2026 has introduced new financial support for millions of British households as Chancellor John Healey announced higher taxes on banks, landlords and savers to help fund measures aimed at easing the cost-of-living crisis.
Delivering his first budget in the House of Commons on Wednesday, 28 October 2026, Healey confirmed that up to 20 million households in England would receive a one-off £100 payment to help with rising energy bills.
The support will target households living in properties within council tax bands A to D, with payments beginning in January 2027.
The Chancellor also announced a temporary increase in the Bank Corporation Tax Surcharge, higher taxes on property and savings income, and an extension of existing fuel duty relief.
The measures come as the UK economy continues to face pressure from inflation, higher energy prices and global instability.
Although the government says the budget will provide much-needed financial breathing space, economic forecasts suggest that living standards will remain under pressure.
What Did John Healey Announce in Budget 2026?
The central announcement was a £2.6 billion household energy payment scheme designed to help families manage winter energy costs.
Eligible households in England will receive £100 directly into their bank accounts or through arrangements administered by local councils.
The government estimates that up to 20 million households will qualify.
Healey also announced several additional measures to support households and businesses.
These include extending the temporary reduction in VAT on electricity, maintaining the fuel duty freeze and increasing tax contributions from banks.
The Chancellor said the government was responding to global economic pressures that had pushed up energy costs and affected household finances.
He also stressed the importance of maintaining control over public borrowing.
Who Will Receive the £100 Energy Payment?
The new Household Energy Payment will be available to eligible households in England living in council tax bands A, B, C or D.
To qualify, the property must generally be the household’s main residence, and the resident must be responsible for council tax.
Most households exempt from council tax are also expected to be included, although the government will publish further eligibility details.
Second homes and empty properties will not qualify.
The scheme is based on council tax bands rather than an individual assessment of household income.
This means some households with relatively high incomes could qualify if they live in an eligible property, while some lower-income households in higher-banded homes may not.
The government says the scheme will cover a large proportion of households experiencing energy-cost pressures.
When Will the £100 Payments Be Made?
Payments are scheduled to begin in January 2027.
Households that pay council tax by direct debit should not need to submit a separate application.
The payment will be transferred directly into their bank account.
Residents who do not pay by direct debit will be contacted by their local council with instructions on how to claim.
The government has warned households to remain alert to potential scams.
Anyone receiving an unexpected message requesting bank details should verify that it genuinely comes from their council before providing personal information.
Will Households in Scotland, Wales and Northern Ireland Receive £100?
The announced payment scheme applies directly to England.
However, the Scottish, Welsh and Northern Irish governments will receive additional funding through the UK’s devolved funding arrangements.
Those administrations will decide how to use the money to provide similar support based on local needs.
This means residents outside England should not assume that they will automatically receive an identical £100 payment.
Further announcements from the devolved governments will clarify what support is available.
Banks Face Higher Taxes to Fund Household Support
One of the budget’s main revenue-raising measures is a temporary increase in the surcharge on bank corporation tax.
The surcharge will rise from 3% to 6%.
The increase will begin on 1 January 2027 and remain in place until 31 March 2028.
The Treasury estimates that the measure will raise approximately £1.5 billion.
This money will contribute to the government’s support for households and businesses.
The surcharge is an additional tax on qualifying banking profits, rather than a direct tax on customers’ deposits.
However, banks may review their commercial decisions in response to higher taxation.
Whether those decisions affect lending rates, savings products or other services will depend on individual institutions and wider market conditions.
Landlords Face Another Property Income Tax Increase
Landlords will also face higher taxes under the budget.
The Chancellor announced a further two-percentage-point increase in property income tax rates from April 2027.
Combined with an increase announced previously, the new tax rates on property income will be:
- Basic rate: 24%.
- Higher rate: 44%.
- Additional rate: 49%.
The changes will affect landlords who pay income tax on taxable rental profits.
The amount an individual landlord pays will depend on their income, allowable expenses and applicable tax position.
Property industry representatives have raised concerns that higher taxes could discourage investment in the private rented sector.
Some argue that landlords may seek to recover additional costs through higher rents.
The Office for Budget Responsibility has also identified a risk that the changes could put upward pressure on rents over time.
However, the actual impact will depend on housing supply, tenant demand and wider market conditions.
Savers Also Face Higher Taxes
The budget includes changes affecting taxable savings income.
The government is increasing relevant income tax rates on savings by two percentage points.
This will matter most to savers whose taxable interest exceeds the allowances they have available.
However, the Chancellor also confirmed that the annual cash Individual Savings Account allowance will remain at £20,000.
That reverses an earlier plan to reduce the allowance.
Money held within a qualifying ISA continues to benefit from its tax-free treatment under the applicable rules.
The government also plans to introduce a new Starter ISA intended to encourage first-time investors.
For savers, the budget therefore combines higher taxation outside tax shelters with the retention of existing ISA allowances.
Energy Bills: What Other Help Is Available?
The £100 payment is only one part of the government’s energy support package.
The Chancellor also extended the temporary reduction in VAT on electricity until July 2027.
The Treasury estimates that this measure will reduce the annual Ofgem price cap by approximately £50 in April 2027 compared with the position without the extension.
The £100 household energy payment is separate from that estimated VAT saving.
Households may also qualify for other support, including the £150 Warm Home Discount, depending on their circumstances.
The government has allocated an additional £100 million for discretionary assistance through local authorities for households that need help but do not qualify for the new £100 payment.
Fuel Duty Freeze Extended Until July 2027
Drivers will receive continued support through an extension of the fuel duty freeze.
The Chancellor confirmed that the existing five-pence-per-litre reduction will remain in place until 1 July 2027.
The measure is intended to reduce the financial pressure on motorists, businesses and workers who depend on road transport.
Fuel prices remain sensitive to international oil markets and geopolitical developments.
The government estimates that maintaining the fuel duty measures will cost approximately £1.4 billion over the relevant period.
The Chancellor also announced changes to approved mileage allowance rates, including an increase in the higher mileage rate from 25p to 35p per mile.
What Does Budget 2026 Mean for First-Time Buyers?
The budget also includes measures intended to support people purchasing their first home.
A new Your First Home scheme will offer qualifying buyers access to government-backed equity loans worth up to 20% of a property’s value.
The loans will have an initial five-year interest-free period.
Eligibility will depend on factors including household income, deposit size and property value.
The government expects applications to open in February 2027, with the first loans potentially available from April 2027.
Supporters argue that the scheme could make home ownership more accessible.
However, the OBR has warned that increasing purchasing power without a substantial increase in housing supply could put some upward pressure on house prices.
What Does the Budget Mean for the UK Economy?
The Office for Budget Responsibility has revised its economic forecasts following the Chancellor’s announcements.
The watchdog expects the UK economy to grow by approximately 1.2% in 2026.
However, its forecast for 2027 has been reduced to 1.0%, compared with a previous estimate of 1.6%.
Higher energy costs, inflation and borrowing costs are among the pressures affecting the outlook.
The OBR has also warned that household disposable income is likely to show very limited growth.
This means that even with temporary support payments, many families may continue to experience financial difficulties.
The Budget also adds to government borrowing over the forecast period.
The Chancellor has argued that targeted support is necessary while maintaining longer-term fiscal discipline.
How Have Businesses and Economists Responded?
The reaction to Budget 2026 has been mixed.
Supporters of the household energy measures argue that targeted assistance will help families facing higher winter bills.
Some business groups have welcomed measures intended to support smaller firms and reduce certain operating costs.
However, landlords and property representatives have expressed concern about the potential effect of higher property taxes on rental supply.
Banking industry observers are examining the implications of the temporary surcharge increase.
Economists have also highlighted the difficult balance between providing immediate financial support and maintaining sustainable public finances.
The OBR’s forecasts underline the continuing challenges facing the government.
Is £100 Enough to Help With Rising Energy Bills?
The £100 payment will provide a modest contribution towards household energy costs.
However, the financial impact will vary significantly depending on household circumstances.
For some families, the payment may cover part of an increased winter bill.
Others may face much larger increases in energy, housing, transport and food costs.
The government’s package is designed to provide short-term assistance rather than fully offset every increase in living expenses.
The effectiveness of the measures will depend partly on future energy prices, inflation and household income growth.
What Happens Next?
The £100 household energy payment is scheduled to begin in January 2027.
The temporary increase in the Bank Corporation Tax Surcharge will also take effect in January.
Changes to property income taxation are due to begin in April 2027.
The fuel duty freeze and electricity VAT reduction will continue until July 2027.
The government will publish further guidance on the payment scheme, including detailed eligibility rules.
Households should check official government and local council announcements rather than relying on unsolicited messages.
Conclusion
Budget 2026 marks a significant attempt by Chancellor John Healey to provide short-term financial assistance while raising additional revenue from banks, landlords and savers.
The headline measure is a £100 payment for up to 20 million households in England, beginning in January 2027.
The Chancellor has also extended electricity VAT relief and the fuel duty freeze.
However, the Office for Budget Responsibility’s forecasts suggest that the wider economic outlook remains challenging.
Higher energy prices, limited growth in disposable income and increased borrowing costs will continue to affect families and businesses.
The coming months will show how effectively the government’s measures ease financial pressure and how households respond to the changes.
Frequently Asked Questions
What is the main announcement in Budget 2026?
A one-off £100 energy payment for up to 20 million eligible households in England.
Who qualifies for the £100 payment?
Generally, households living in their main residence in council tax bands A to D in England, subject to the detailed eligibility rules.
When will the £100 payment arrive?
Payments are expected to begin in January 2027.
Do I need to apply for the £100 payment?
Eligible council tax payers who pay by direct debit should receive it automatically. Their council will contact others.
Will Scottish households receive the payment?
Scotland will receive additional funding, but the Scottish government will decide how to provide support.
How much is the bank tax increasing?
The Bank Corporation Tax Surcharge will temporarily rise from 3% to 6%.
Are landlords paying more tax?
Yes. Tax rates on property income are set to rise further from April 2027.
Will the cash ISA allowance change?
No. The government has confirmed that the annual cash ISA allowance will remain at £20,000.
Will fuel duty increase?
The existing fuel duty freeze and five-pence reduction have been extended until July 2027.
Will the budget reduce energy bills?
The government is providing a £100 payment and extending electricity VAT relief, but actual household bills will also depend on energy prices and consumption.
