Introduction

Chancellor of the Exchequer John Healey presented his first Budget on 28 October 2026, promising 'Breathing Space now, Hope for the Future'.

Breathing space

Mr Healey said he had rejected broad-based tax rises as families and businesses face rising energy costs.The Chancellor extended the VAT cut on domestic electricity and the 5p Fuel Duty cut to July 2027 and announced a £100 Household Energy Payment this winter for households in Council Tax bands A to D in England. For the high street, the Small Business Rate Relief threshold will rise so that a further 70,000 retail, hospitality and leisure businesses pay no business rates.

Paying for it

To fund this support, the Chancellor temporarily doubled the Bank Corporation Tax Surcharge. In addition, the Budget announced further increases to the rates of tax on property and savings income from April 2027. The lifetime limit for Business Asset Disposal Relief will be halved, although the planned cut to the cash ISA limit will not go ahead.

For businesses, there is a further cut in the main rate Writing Down Allowance from 14% to 12% from April 2027. This funds an increase in the main rate First Year Allowance from 40% to 50% for expenditure incurred from 1 January 2027.

Mr Healey said that 'my choice in the Budget today is to give families and businesses some breathing space now, and to begin the radical reform of energy to reduce bills in the future'.