Chancellor John Healey’s Budget offers targeted help with household bills and travel costs, while protecting the Cash ISA allowance. The gains will vary: some households will receive direct support, while others may benefit through lower costs over time.
£100 energy payment for some households
Households in council tax bands A to D are due to receive a £100 energy payment to help with bills through the spring. The Budget also extends the cut to VAT on electricity until July, a measure expected to reduce the annual price cap by around £50.
Gas standing charges are set to be removed in 2027, or as soon as possible afterwards. Their cost will instead be reflected in the unit price of gas. This could save around 60% of account holding households an average of £45 a year, although people who use more gas may see less benefit or pay more.
Cash ISA allowance held at £20,000
The Budget keeps the annual Cash ISA allowance at £20,000. Savers can continue to put up to that amount into a Cash ISA each year and earn interest tax free. This preserves a familiar way to build savings for a future purchase or keep money available for emergencies.
Fuel duty cut extended
The 5p fuel duty cut will continue until July 2027, delaying a planned increase. This may help motorists manage costs, although the value to each driver will depend on how much fuel they buy and changes in pump prices.
For people who use their own vehicles for work, the 55p tax free mileage rate for the first 10,000 business miles is being made permanent. The rate for additional miles will rise from 25p to 35p. The Government estimates that someone driving 6,000 business miles could gain up to £120 a year, while someone driving 15,000 miles could gain up to £300.
Changes to wages, food costs and support
The National Living Wage and National Minimum Wage are set to rise by 3.9% for 2.3 million people. Those receiving the new rates will see higher gross pay, though take home pay will depend on tax, National Insurance and any changes to benefits.
The Budget also suspends import tariffs on more than 100 food products. The Government estimates that this could save shoppers £120 million to £185 million a year overall. How much reaches household budgets will depend on whether suppliers and retailers pass the savings on.
Carer’s Allowance will gradually taper as earnings rise above the limit, instead of being lost all at once. This change is expected to begin between 2030 and 2031. Eligible self employed fathers, partners and adopters in Great Britain are also due to receive parental pay from April 2029.
What to take from the Budget
The most immediate help is aimed at energy bills, while the fuel duty extension and wage changes may benefit some households over the coming months. The Cash ISA allowance gives savers continued scope to hold tax free cash. Other changes, including support for carers and new parents, are further away.
The effect on personal finances will depend on household income, council tax band, energy use, savings and travel needs. Check when each measure takes effect and whether you qualify before factoring the headline figures into your budget.
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