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UK Budget 2026: Healey’s Measures and the Finance Bill Path

Chancellor John Healey delivered the 2026 Budget on 28 October. What it contains, what the OBR forecasts, and how its tax changes become law.

ByPeter
Palace of Westminster across the Thames, illustrating the UK Budget 2026 statement
AI-generated illustration

Chancellor of the Exchequer John Healey presented the 2026 Budget to the House of Commons on 28 October, straight after Prime Minister’s Questions. The Treasury’s Budget document pairs a £2.6 billion Household Energy Payment with a temporary rise in the tax surcharge on bank profits. Most of the tax changes will not be law until Parliament passes a Finance Bill.

At a glance

  • What: the 2026 Budget statement, the government’s annual tax and spending plan, delivered on 28 October 2026 (GOV.UK).
  • Headline support: a £100 payment from January 2027 for up to 20 million households in England in council tax bands A to D, according to the Budget document.
  • Main revenue measure: the Bank Corporation Tax Surcharge rises from 3% to 6% for 15 months from 1 January 2027.
  • Next: four days of debate on the Budget resolutions, then a Finance Bill for 2026-27.
Palace of Westminster seen from across the Thames on the day the UK Chancellor presents the 2026 Budget
AI-generated illustration

What the Budget contains

The Budget document lists these main measures:

  • Energy bills: the cut to VAT on electricity is extended until July 2027, which the Treasury says takes about £50 off the annual Ofgem price cap from April 2027, alongside the £100 Household Energy Payment paid through the council tax system. Devolved governments receive a share to provide similar support.
  • Fuel duty: the 5p cut and freeze, and the heavy goods vehicle road tax holiday, are extended to 1 July 2027.
  • Wages: the National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027; the government expects about 2.3 million workers to benefit.
  • Business rates: for retail, hospitality and leisure properties in England, the threshold for full Small Business Rates Relief rises from £12,000 to £18,000 from April 2027.
  • Gambling: Machine Games Duty rises from 20% to 25% on machines with stakes over £1 from April 2027.
  • Savings: the cash ISA limit stays at £20,000, and a First Time Buyer ISA replaces the Lifetime ISA for new savers from 6 April 2029.

The document says the bank surcharge rise is meant to help fund the household measures and that it “will be legislated for in Finance Bill 2026-27 and will not be extended.”

The economic forecast

The Office for Budget Responsibility (OBR), the independent forecaster, raised its 2026 growth forecast to 1.2% and expects growth to slow to 1.0% in 2027, according to the Budget document, which cites higher energy prices and interest rates. The BBC reported that the OBR now expects inflation of 3.1% this year and 3.4% in 2027, returning to the Bank of England’s 2% target in 2030.

Where it stands

  • 23 October 2026: UK Parliament announced the Budget statement for 28 October at about 12:30 p.m.
  • 28 October 2026: Healey delivered the statement; the Treasury published the Budget document and supporting papers the same day.
  • 29 October, 2 and 3 November 2026: the Budget debate continues, according to the Leader of the House’s business statement of 22 October.

What supporters and critics say

Healey told MPs, according to The Independent: “I know that people look to Government at times like this, not to solve all their problems, but to give them a bit of breathing space.” He linked rising energy bills to the conflict in the Middle East.

Responding for the Conservatives, Kemi Badenoch said: “Next year, under Labour, the tax burden will be the highest in our country’s history,” as quoted by The Independent.

Analysis: The Budget statement itself changes no law. Its tax measures depend on the Budget resolutions and the Finance Bill, so the bank surcharge, Machine Games Duty and ISA changes will be tested in Commons votes over the coming weeks. Some duty changes can take effect sooner under the Provisional Collection of Taxes procedure.

What happens next

  • Budget resolutions: MPs debate and vote on the resolutions that authorise each tax change. Under the Provisional Collection of Taxes procedure, a motion agreed straight after the statement lets some changes take effect at 6 p.m. on Budget day, according to UK Parliament.
  • Finance Bill 2026-27: the bill that gives the resolutions lasting legal force, usually split between a Committee of the whole House and a Public Bill Committee.
  • Royal Assent: the formal approval that makes the Finance Bill law. The House of Lords cannot amend money bills.

Sources

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