Britain’s 2026 Budget pairs targeted energy support with higher taxes on banks, property and savings income as the Office for Budget Responsibility (OBR) projects UK growth easing to 1% next year.
Chancellor of the Exchequer John Healey presented the Budget on Oct. 28. He said the economy faced pressure from the conflict in the Middle East, trade tensions and Russia’s invasion of Ukraine.
The government has set aside £2.6 billion for a £100 Household Energy Payment, due to begin in January 2027. It is intended for up to 20 million households in council tax bands A to D in England. Devolved governments will receive funding for similar support elsewhere in the United Kingdom. The government also extended the temporary VAT cut on electricity to July 1, 2027; it estimates the extension will lower Ofgem’s annual price cap by about £50 in April 2027.
The government plans to raise the Bank Corporation Tax Surcharge from 3% to 6% for 15 months, from Jan. 1, 2027, through March 31, 2028. HM Treasury estimates the increase will raise £1.5 billion to help pay for support to households and businesses.
Rates on property and savings income are scheduled to rise by two percentage points from April 6, 2027. The OBR says the rates will reach 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers. The property-income changes cover England, Wales and Northern Ireland, while the savings-income changes apply throughout the UK.
A proposed Founders’ Relief would give qualifying founders of high-growth, innovative UK companies a 10% capital-gains tax rate on up to £10 million in lifetime gains, starting April 6, 2027. The government is consulting on eligibility and design, with legislation planned for Finance Bill 2026/27.
The OBR projects GDP growth of 1.2% in 2026 and 1% in 2027. It expects CPI inflation to average 3.5% in 2027 before returning to 2% in 2028. The OBR says higher energy prices weigh on household purchasing power because the UK imports more energy than it exports. It expects less follow-on inflation than after the 2022 energy-price spike, pointing to a looser labor market.
The OBR’s figures put the government’s 2029-30 margin under the current-budget rule at £15 billion, with a 56% probability of meeting the rule. The Office for National Statistics said CPI inflation was 3.5% in September, up from 3.1% in August; its next inflation release is scheduled for Nov. 18.
