Northern Ireland is a devolved government so not all the budget will automatically apply.
Chancellor John Healey unveiled a £100 winter energy payment for 20 million households at Westminster on Wednesday, as the Labour Government sought to ease rising living costs, support local communities and maintain its fiscal rules in its first major financial statement under Prime Minister Andy Burnham.
The energy payment is not yet confirmed for Northern Ireland residents however, the Chancellor encouraged Stormont to distribute its portion in similar fashion.
Presenting the 2026 Autumn Budget, Healey announced a package of household and business relief alongside higher taxes on banks, gambling, property and savings income. He said the measures had been shaped by global economic pressures, including higher oil and gas prices linked to conflict in the Middle East.
“This is a Budget for the working people of Britain and for British businesses, big and small,” Healey told MPs.
He characterised the package as offering “breathing space now, fresh hope for the future, delivered to the British people by this Labour government”.
£100 payment for 20 million households
The centrepiece is a £2.6 billion scheme providing £100 to households. Payments will be made directly into bank accounts, with corresponding funding provided to the devolved governments in Scotland, Wales and Northern Ireland.
VAT relief on household electricity will remain in place through the winter and spring until July, cutting the annual energy price cap by about £50, according to the Chancellor. Ofgem will also be instructed to remove standing charges from household gas bills from next year, with similar reforms planned for electricity.
“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,” Healey said.
The Chancellor said the Government remained committed to achieving net zero by 2050 but would place affordability at the centre of its immediate energy policy.
“From this point, our Labour government’s priority is first and foremost cheaper energy, with clean power key to achieving this,” he said.
Northern Ireland funding
The Budget will affect Northern Ireland primarily through changes to the block grant under the Barnett formula, which provides between 93% and 95% of Stormont’s day-to-day spending resources.
Northern Ireland has been operating without a locally agreed Executive budget six months into the financial year. Departments have instead been working with contingency allocations of up to 95% of the previous year’s spending.
Any additional funding could help ministers address public-sector pay demands, overspending pressures and threatened service reductions. However, some UK-wide policies, including energy support, may not apply automatically because Northern Ireland has a separate energy market and regulatory system.
In those cases, additional money will be passed to Stormont to design and administer local schemes.
Energy relief for businesses
Under the British Industrial Competitiveness Scheme, electricity bills will be reduced by 25% for 10,000 energy-intensive companies. The scheme will begin in April, with payments backdated to cover costs incurred during the current year.
The Government also intends to move older renewable projects on to fixed-price contracts, speed up connections to the electricity grid and restrict support for new projects to those judged capable of lowering bills.
Fuel-duty relief will continue until July, including the existing 5p reduction and the lower duty rate on red diesel. The higher mileage allowance for people using their own cars for work will increase from 25p to 35p a mile, while the previously announced rise in the standard mileage rate will become permanent.
Tariffs on more than 100 supermarket products will also be suspended in an effort to limit food-price increases.
Minimum wage and carers’ support
The national minimum wage and national living wage will both rise by 3.9%, benefiting an estimated 2.3 million workers.
The Government will remove the earnings “cliff edge” under which carers can lose their entire allowance after exceeding the income threshold by a small amount. Self-employed fathers and partners will also become eligible for paid parental leave for the first time.
Small-business rate relief for retail, hospitality and leisure premises will be extended by increasing the qualifying threshold from £12,000 to £18,000.
The Treasury estimates that 70,000 additional businesses will be removed from business rates altogether. Half of shops, restaurants and gyms are expected to pay no business rates, while rates for other eligible companies will be frozen in real terms for two years.
A previously announced 20% business-rates reduction for pubs, clubs and music venues will take effect next April. About 2,000 small brewers and cider producers will also receive support through a £10 million alcohol-duty relief scheme.
Gambling games duty on higher-stakes machines will rise from 20% to 25% to help finance the measures. Pubs and seaside arcades will be protected, but adult gaming centres and vape shops will be excluded from the expanded business-rates relief.
Banks face temporary surcharge
Banks will pay an additional three percentage points through the corporation-tax surcharge from January. The increase will remain in place for 15 months, with the proceeds used to fund short-term energy support.
“Just as the British people helped support our banks 20 years ago, it is our banks that will help give families breathing space today,” Healey said.
The Chancellor said the Budget imposed no increases in taxes on employment income or dividends. However, tax rates on property and savings income will rise by a further two percentage points from April 2027.
The Treasury estimates that 88% of savers will pay no additional tax. The annual cash ISA allowance will remain at £20,000 for all age groups, while officials will work with the financial sector to develop a “starter ISA” for first-time investors.
The lifetime limit for business asset disposal relief will fall from £1 million to £500,000. A new founders’ relief will, however, introduce a 10% capital-gains-tax rate on lifetime gains of up to £10 million for qualifying company founders.
“When business founders take that risk, build an exceptional company and create wealth for Britain, we should recognise that success and keep those people here to invest again,” Healey said.
Chancellor says fiscal rules have been met
Healey said the Budget complied with the Government’s two fiscal rules: that tax receipts must cover day-to-day spending and that public-sector net financial liabilities must fall as a proportion of gross domestic product.
Headroom against the current spending rule is forecast at £15 billion in 2029–30, rising to £22 billion the following year.
“That is what a buffer is for: use it when you need it, rebuild it when you can,” he said.
Borrowing is forecast to decline from 4.2% of GDP this year to 3.4% next year and 2.9% in 2028–29. It is then expected to fall to 2.1% in 2029–30 and 1.8% in each of the following two years.
The Chancellor said the current Budget deficit would be eliminated within three years. The Office for Budget Responsibility nevertheless expects debt-interest spending to be £14 billion higher this year.
The OBR forecasts economic growth of 1.2% this year and 1% next year, followed by 1.6% in 2028, 1.8% in 2029, 1.7% in 2030 and 1.6% in 2031.
Investment and regional powers
The National Wealth Fund and British Business Bank will receive an additional £20.4 billion, which the Government estimates will support 140,000 jobs.
The Budget includes £500 million for artificial intelligence safety and security, £140 million for the sovereign AI unit and a new data-centre covenant. A further £200 million in British Business Bank commitments will be directed towards women-led businesses and investment funds.
The tax-free trading allowance will rise from £1,000 to £3,000, while a Young Entrepreneurs’ Allowance will cover one year of living costs for qualifying founders.
Healey also announced more than £1 billion for life sciences and a £2.5 billion partnership with Rolls-Royce to develop next-generation turbine technology in Britain.
“Too often, we invent technologies the world wants here in the UK and then see the jobs and profits go somewhere else,” he said.
Under what Healey called “the biggest wave of devolution in a generation”, mayors will receive 20% of business-rates revenue from next year. All business-rates revenue is due to be retained locally by the end of the decade.
From 2028, mayoral authorities will receive a share of income-tax receipts and gain the power to impose overnight visitor levies. They will also have access to £1.5 billion of devolved lending.
Housing, defence and pensions
The Social and Affordable Housing Programme will receive another £1.5 billion, taking the Government’s total commitment to council and affordable housing to £40 billion. A further £430 million will fund support for people sleeping rough.
A new first-time buyer ISA will replace the lifetime ISA, while a £4.7 billion government-backed equity-loan programme, Your First Home, will begin next spring.
“Hope starts with a home — a route off the streets, a secure home to raise your kids and the keys to your own front door,” Healey said.
The Budget also provides £10 billion in additional economic and military assistance for Ukraine. The Government reaffirmed its plans to spend 3% of GDP on defence by 2030 and meet a NATO commitment of 3.5% by 2035.
Up to £5 billion will be deployed through the National Wealth Fund and British Business Bank for defence, dual-use technology and sovereign industrial capacity.
On welfare, the Government will publish reform proposals before the end of the year after receiving independent reports in November. Legislation is expected in 2027.
The state-pension triple lock will be adjusted from 2030 under plans intended to maintain increases while tracking earnings and inflation. The Treasury estimates the change will save £15 billion a year by the end of the 2030s and £50 billion by 2050.
Closing his statement, Healey said the Budget combined immediate support with investment and fiscal restraint.
“We know who we are. We know where we’re going. We can see the Britain we want to be,” he said.
