Budget 2026 – what has ‘breathing space’ budget done for Devon and your pocket?

‘Breathing space’ was the theme for the Chancellor’s debut budget today (Wednesday, October 28) with cost of living help for many households in Devon and good news for numerous smaller local businesses.

Setting out his Autumn Budget before the House of Commons at lunchtime, Chancellor John Healey announced a raft of measures to help people with energy bills, boost small businesses and bring good news for savers.

Next year up to 20 million households in bands A to D in England will get a £100 energy payment, while the government will ask Ofgem to scrap gas standing charges, as previously announced. The cost would be moved to unit rates, meaning not all households will save.

The temporary cut of VAT on electricity has been extended to July 2027, taking around £50 off the energy price cap.

The National Living Wage will go up 3.9 per cent to £13.21 an hour from April 1, 2027, worth £910 a year to a full-time worker.

As previously mentioned, tariffs will be scrapped on more than 100 imported food items that include beans and chocolate, saving up to £21 a year for some households.

Two weeks support in parental pay of up to £194 per week will be made available for more than 160,000 people, including self‑employed dads and partners.

The Chancellor has scrapped the planned cut on tax-free cash ISA limits his predecessor Rachel Reeves intended to implement in April 2027, so instead of the expected £12,000, savers can continue to deposit £20,000 a year tax-free.

For motorists, the 5p cut on fuel duty is extended again to July next year and there was better news for drivers using their own vehicle for work from April 2027, with the tax‑free mileage rate staying at 55p per mile for the first 10,000 work miles, rising from 25p to 35p beyond that.

For those receiving Carer’s Allowance, the ‘cliff edge’ where a small rise in earnings ends the benefit entirely will be replaced with a gradual taper from 2030-31.

New low or no-interest loans will enable households to invest in greener energy solutions such as solar panels, batteries and heat pumps.

Half of all retail, hospitality and leisure properties will pay no business rates, with about 70,000 more benefitting thanks to an increase of the rates threshold from £12,000 to £18,000, which the government says will free up around half of shops, pubs, cafes and gyms. It said all of them get a two-year freeze in rates in real-terms.

There were no broad tax rises – the Treasury says around 84 per cent of taxpayers will see no increase in their tax bill.

To pay for the ‘breathing space’ measures, the Chancellor is increasing a surcharge levy on banks from three per cent to six per cent, for a 15 month period, estimated to raise around £1.5billion.

Gambling machine games duty rises from 20 to 25 per cent on higher-stakes machines, while vape shops and adult gaming centres lose some business rates reliefs.

Tax on interest from savings and profits from renting out property is going up again by a further two points, affecting savers whose interest from non-ISA accounts goes over their tax-free allowance – £1,000 a year for basic rate taxpayers and £500 for higher rate.

Landlords will also be taxed further on rental profits once allowable expenses are deducted.

With devolution very much on the agenda in Devon, the government said it was in the final stages of agreeing new mayoral authorities for areas including Devon, Plymouth and Torbay alongside Cornwall, Lancashire, Surrey, Wessex and Thames Valley and Kent and Medway.

Elected regional mayors – not town or city mayors – will get a share of income tax from 2028, which would apply locally once the proposed Devon, Plymouth and Torbay mayoral authority is set up, while all strategic authorities will get the power to charge an overnight visitor levy, which could affect Devon tourism.

Regional mayors will get a share of business rates from 2027, rising to 100 per cent of rates being retained locally by the end of the decade.

On the wider policy stage, it was announced Rolls-Royce and the government will begin a joint 10-year £2.5bn investment programme on next-generation gas turbines, plus more than £1bn will be invested in life sciences from Convatec in Manchester, Vertex in Oxford and Kindeva in Loughborough.

The AI hot potato saw a £700million investment package announced, including £120m for the AI Security Institute and £140m for the Sovereign AI Unit, plus a new Data Centre Covenant.

Ukraine will get more than £10bn of extra economic and military support, while the government said the UK’s current £15bn defence plan is fully funded, taking defence to 2.7 per cent of GDP in 2027-28, working towards a target of three per cent by 2030 and 3.5 per cent by 2035.

We will bring you local reaction to the budget as we get it, but how will this affect you, your family or business? If you have a budget-related story, email us at [email protected]

AUTUMN BUDGET 2026 AT A GLANCE

Key dates for your diary

• Today: the Lifetime ISA withdrawal penalty falls to 20 per cent for first-time buyers purchasing homes above the £450,000 cap
• April 2027: National Living Wage rises to £13.21; tax on savings interest and rental profits goes up; Pension Tax Allowance starts; electricity bill support for industry begins
• July 1, 2027: the VAT cut on electricity and the fuel duty freeze both end
• October 2027: online marketplaces must collect VAT from sellers on their platforms
• 2028: mayors get a share of income tax
• March 31, 2028: the higher bank tax surcharge ends

Pensioners

• People over State Pension age with income up to the full new State Pension will pay no income tax from April 2027
• About 500,000 pensioners benefit and 290,000 of them will pay no tax at all

Homebuyers and renters

• A new First Time Buyer ISA to help people save for a deposit
• The Your First Home Scheme aims to help 70,000 people onto the property ladder
• An extra £1.5bn for social and affordable housing
• £432m over two years to tackle rough sleeping

Drivers

• Fuel duty decisions will make petrol and diesel 15p a litre cheaper from April 2027 than planned under the previous government, says the Treasury
• Cheaper charging at local, lower-powered public EV chargers, worth about £150 a year to drivers who use them

Energy

• The planned tax on gas bills to fund hydrogen has been scrapped
• No new policy costs will be added to bills unless they cut bills or keep the lights on

Start-ups and small firms

• The trading allowance for side hustles and new businesses triples from £1,000 to £3,000
• A new Founders Relief brings a 10 per cent Capital Gains Tax rate for founders of high-growth firms
• Non-compete clauses will no longer be allowed to stop start-ups hiring staff
• 1,000 new Post Office parcel drop boxes and 600 upgraded branches

Who pays more

• Banks: their surcharge doubles to 6 per cent for 15 months
• Savers and landlords: tax rates on savings interest and rental profits rise by 2 more percentage points
• Online sellers: VAT is collected at the marketplace from October 2027
• Large minicab operators: VAT on the full fare

The economy in numbers

• Growth forecast is 1.2 per cent this year, slowing to 1 per cent in 2027
• Government borrowing falls from 4.2 per cent of GDP this year to 1.8 per cent by 2030-31
• £14bn extra spent on debt interest this year
• The Chancellor’s financial buffer is cut to £15bn, down £9bn since March