Chancellor John Healey delivered the Autumn Budget this week, promising “breathing space now and fresh hope for the future”. In his first fiscal update, Healey said it would be a “Budget for the worker, the sole trader, the parent at the school gate”.
But for some groups it was not good news, with income tax thresholds remaining frozen, ultimately “scooping more money out of pay packets”, said the BBC.
The Budget was a “raft of fiddly measures”, said the Institute for Fiscal Studies, “but very little that will move the dial on growth”.
Plus, while cost of living support will be welcomed, the update did nothing to “make the wealthiest pay fair taxes on their income from assets, nor a fair tax on the extraordinary profits banks have been making”, said Tax Justice UK.
Energy bill support
Healey extended the VAT cut on energy bills until July 2027, which is expected to take around £50 off the annual Ofgem price cap next April.
Standing charges on gas bills will be abolished next year. In reality, the standing charge will be added to the unit rate of gas instead so “lower users are expected to benefit from lower bills, but those with above average consumption are likely to pay more”, said MoneySavingExpert.
Around 20 million homes on council tax bands A to D will be eligible for a Household Energy Payment of £100 to help pay their energy bills.
Minimum wage boost
Both the national minimum wage and the national living wage will rise by 3.9% in April. The national living wage, which applies to people aged 21 and over, will rise from £12.71 to £13.21. The national minimum wage, for workers aged 18 to 20, will go from £10.85 to £11.27.
Labour had previously pledged to increase the younger rate faster than the adult one, but this “marks a slowdown in wage rises for the youth”, said LBC, and does nothing to “narrow the minimum wage gap between older and younger workers”.
Fuel duty freeze
There was some good news for motorists amid high petrol prices as fuel duty will be frozen for the 16th year in a row.
It will be a “mild sigh of relief”, said the RAC, but drivers will be hoping for an easing of international conflicts if pump prices are to truly come down in “a meaningful way”.
Savings
Healey scrapped plans to lower the cash ISA allowance to £12,000. But he announced that the rates of tax on income from property and savings will rise by two further percentage points from April 2027 to 24%, 44% and 49% depending on your tax band.
The cash ISA U-turn will “delight” savers, said Moneyfacts’ Rachel Springall, but the higher taxes mean utilising any allowances to shelter savings from tax is “vital”.
But landlords will be “particularly disappointed”, said Savills. The higher tax on rental income “runs the risk of further restricting rental supply” and piling “upward pressure on rents”.
Your First Home
The chancellor confirmed that a new housing support scheme called Your First Home will launch next spring. It provides an equity loan from the government to support a 2.5% deposit on a new-build purchase for first-time buyers. There will be household income caps and local property price caps.
A new First Time Buyer Isa will be launched to replace the Lifetime Isa. In a “notable change” from earlier proposals, said The Independent, the government bonus of 25% will now be worked out on the final total balance rather than payments into the Isa. This ensures savers “don’t miss out” on any boosts to their savings “through interest or capital growth”.
In another “huge change”, said The Sun, Healey announced that the Lifetime Isa withdrawal penalty will be scrapped if savers are buying a home above the £450,000 limit. Buyers will at least get back what they contributed.
From savings to energy bills, the announcement will have a direct impact on millions
