Chancellor John Healey announced a raft of financial changes in his Budget today. Here's a recap of all the key changes likely to affect advisers in his "Budget for the working people of Britain."
Mr Healey said his Budget would give families and businesses "breathing space from rising costs, with action on energy bills, fuel duty, wages and the everyday cost of living."
There were also measures to encourage investment and entrepreneurship and maintain economic stability and fiscal discipline.
Households:
Help with energy bills: In 2027 the government is providing a £100 Household Energy Payment for up to 20 million households in bands A to D in England, with funding for similar support provided to the rest of the UK, while the temporary VAT cut on electricity bills will be extended until 1 July 2027. This will be paid for by increasing the Bank Corporation Tax Surcharge from 3% to 6% for 15 months, before ending on 31 March 2028.
Paternity: The government is extending parental pay to more than 160,000 additional parents, including self-employed dads and partners who have previously missed out
- Higher wages: On 1 April 2027, the National Living Wage will increase by 3.9% to £13.21 per hour. This uplift represents an increase of £910 to the gross annual earnings of a full-time worker on the National Living Wage.
- There will be a consultation on launching a new 'Starter ISA' to encourage first time investors.
Support for drivers
- Drivers will see an extension to the 5p cut to fuel duty for a further six months, and deferment of the planned Retail Prices Index (RPI) increase, to 1 July 2027, to support households and businesses.
- Backing people who drive for work: To put more money back into the pockets of those who rely on their cars for work, the government will be permanently increasing the generosity of tax free mileage rates to support around 2 million employees and 1 million self-employed people across the UK.
Housing
Helping people own a home: The 'Your First Home Scheme' will help 70,000 people onto the property ladder and save first time buyers hundreds of pounds a month.
- Helping first-time buyers save: A new First Time Buyer ISA will provide a simpler route to saving for a deposit, while from today the Lifetime ISA withdrawal charge will be reduced to 20% so that first-time buyers purchasing a home above the existing £450,000 property price cap will not be penalised.
Business
Delivering the government’s commitments on business rates: All retail, hospitality and leisure properties in England will see their business rates either frozen in real terms, reduced, or cut to zero. The Chancellor also announced a two-year real-terms freeze in business rates bills for all retail, hospitality and leisure properties.
- Addressing industrial energy prices: From April 2027, the British Industrial Competitiveness Scheme will support over 10,000 eligible businesses in electricity intensive Industrial Strategy sectors and the foundational sectors in their supply chains, cutting their electricity bills by up to 25%.
Backing British businesses to innovate and grow
Backing entrepreneurs and scaling businesses: The government is introducing a new Founders Relief, to encourage founders to scale their companies here in the UK, and when the time comes, reinvest in the next British success story. It will offer eligible founders of high-growth, innovative companies a reduced 10% rate of Capital Gains Tax on up to £10 million of lifetime gains. The government is also tripling the trading allowance from £1,000 to £3,000 to support people starting a business; improving venture capital schemes and simplifying access to R&D tax reliefs to help growing firms attract investment and innovate; and expanding tax-advantaged employee share schemes to help ambitious businesses recruit and retain talent.
Attracting talent: Reform of the visa system to deliver the most "pro-business migration system" in Europe for highly skilled workers, expanding the High Potential Individual visa to graduates from the world’s top 150 institutions, changing visa salary requirements to help employers across the UK hire the people they need, extending the Graduate visa to two years for eligible universities, and giving the highest-skilled workers longer to find a new job, all helping businesses attract the skills and talent they need to grow.
Removing barriers to growth: This Budget also confirms that the government will legislate to make sure that non-compete clauses will no longer be a barrier to hiring for our most promising startups and scaling firms. The government will also consult shortly to understand the wider use of restrictive practices. We will then set out a detailed government position on all these issues in early 2027 in advance of legislating.
Backing Britain to lead on AI
The Budget also delivers the government’s most ambitious AI package yet, investing £700 million to tackle the risks of AI while unlocking its potential to raise living standards, strengthen national security and support working people across the country.
AI security: To ensure Britain is prepared for the challenges AI presents, the package includes an additional £120 million for the AI Security Institute, £40m for a world-first national capability to investigate and respond to agentic security incidents. This is alongside investment in institutions and infrastructure to strengthen resilience against cyber and biological threats, and further funding for the AI Economics Institute to assess the impact of AI on jobs, productivity and living standards.
Ensuring sovereign capability: The package also backs the UK to capture AI’s benefits, with an additional £140 million for the Sovereign AI Unit, helping promising UK AI companies scale and maintain a meaningful presence here, and £30m to pilot local partnerships, starting with West Yorkshire Combined Authority, South Yorkshire Mayoral Combined Authority, and York and North Yorkshire Combined Authority, to develop locally-led approaches to AI adoption.
Progressing the infrastructure Britain needs: A new Data Centre Covenant will unlock the infrastructure Britain needs to lead on AI while ensuring communities share in the benefits. Strategic projects seeking enhanced government support will be expected to meet stringent tests on community investment, energy costs, supporting British industry and jobs and strengthening our national security.
Backing investment in Britain
Good growth starts with taking control of the essentials that people, businesses and places depend on. The government will provide greater strategic direction, certainty and accountability across areas including energy, transport, water and housing, using public investment to unlock private capital, strengthen Britain’s strategic industries and create the conditions for businesses to invest and grow.
Investing in Britain’s future: The National Wealth Fund and British Business Bank will receive an additional £20.4 billion, strengthening the government’s two main public finance institutions and their role in supporting reindustrialisation, regional growth and Britain’s strategic industries.
Mobilising investment: The National Wealth Fund will receive an additional £15.4 billion, including £2 billion for the new Energy Wealth Fund, allowing it to continue investing and lending at its current rate over the coming years (to be drawn down over and beyond the forecast period), and use public capital to help mobilise private investment in businesses and major projects.
Backing businesses to grow: Additional capital for the British Business Bank will enable it to go further in supporting new investment and helping businesses to start, scale and stay in Britain, with a particular focus on improving access to finance for smaller firms.
Creating jobs across Britain: Together, the recapitalisation is expected to create and support 140,000 jobs across sectors including advanced manufacturing, AI, defence, technology and clean energy, backing Britain’s industrial strengths and driving growth across the country.
Fair taxes and control of spending
Temporary contribution from banks: The Bank Corporation Tax Surcharge will increase from 3% to 6% for 15 months, raising £1.5 billion to help fund support for households and businesses, before ending on 31 March 2028.
Modernising company distributions framework: Rules governing company distributions will be modernised to prevent complex arrangements being used to extract profits at lower tax rates, while protecting genuine commercial transactions and family and families passing down their business.
Levelling the playing field online: From October 2027, online marketplaces will take responsibility for collecting VAT on qualifying sales by UK businesses using their platforms, tackling evasion that undercuts honest firms on the high street and online.
- Savings and property income: From April 2027, tax rates on savings and property income will rise by a further two percentage points across all bands, this is a fair and progressive approach, and the vast majority of taxpayers will not be affected. 84% of taxpayers will see no increase in their tax bill and generous incentives to save are preserved, including the £20,000 cash ISA limit for everyone. The government will also work with industry to explore creating a new ISA incentive for people investing in a stocks and shares ISA for the first time. The detailed design will be developed with industry.
Protecting pensioners: From April 2027, people above State Pension age with total income up to and including the value of the new State Pension will not pay Income Tax thanks to the Pension Tax Allowance. In 2027-28, Around 500,000 pensioners are set to benefit, with around 290,000 paying no tax at all and the remainder receiving a tapered allowance.