Autumn Budget 2026: our briefing on what it means for households

In the Budget on 28 October 2026, the Chancellor announced support with energy bills this winter, a Pension Tax Allowance, higher tax rates on property and savings income, and a larger trading allowance, among other measures. This briefing sets out what the seven measures for households in our Autumn Budget 2026 dashboard do together and one by one, how our estimates compare with the official costings, and which measures we don't yet model.

Key results, from PolicyEngine's static microsimulation:

• The seven measures cost £3.11 billion in 2026-27 and £0.61 billion in 2027-28. From 2028-29 they raise money: £0.21 billion in 2028-29, and between £0.17 billion and £0.30 billion a year to 2031-32.
• In 2026-27 they raise household net income by £107 a year on average. Every income decile gains between £98 and £110, so the gain is 0.41% of net income in the lowest-income decile and 0.06% in the highest.
• About 99% of people live in households that gain in 2026-27. In 2029-30, after the energy measures end, about 4% of people live in households that gain and about 6% in households that lose.
• The highest-income decile loses £50 a year on average in 2028-29, rising to £56 in 2031-32, as property income tax rates rise.

These figures cover only the seven measures we model, which Table 1 lists, and none of the Budget's other measures.

Use PolicyEngine's Autumn Budget 2026 dashboard to explore the results by measure, year and household, or to calculate the effect on your own household.

Table 1: The seven measures we model

Measure	What changes	When
Household Energy Payment	A one-off £100 for households in council tax bands A to D in England	From January 2027
Zero VAT on electricity	The 0% rate on household electricity, in force in Great Britain since 1 October 2026, runs three months longer	To 1 July 2027
Fuel duty	The 5p cut continues, and the April 2027 RPI rise moves to 1 July 2027	To 1 July 2027
Pension Tax Allowance	An income tax reduction for people above State Pension age, or reaching it during the tax year: in full where total income is at most the full new State Pension, tapering above it	6 April 2027 to 5 April 2030
Property income tax	Rates on property income rise 2 points, to 24%, 44% and 49% in England, Wales and Northern Ireland	From 6 April 2027
Trading allowance	Rises from £1,000 to £3,000	From 6 April 2027
Carer's Allowance taper	Above the weekly earnings limit, the allowance falls £1 for each £1 of earnings instead of ending all at once, in England and Wales	During 2030-31

Sources: Budget 2026 and the policy costings.

The Budget makes other changes that reach households, which our dashboard does not model:

• Savings income tax. From 6 April 2027 the rates on savings income also rise 2 points, to 24%, 44% and 49% across the UK. We give the official costing below; our own estimate follows with a data update.
• The Triple Lock. From April 2030 the State Pension rises each year by the highest of 2.5%, inflation, or the amount that keeps its value relative to earnings at its April 2029 level. The government estimates this reduces State Pension spending by £15 billion a year by the late 2030s. We analyse it separately.
• The National Living Wage rises 3.9% to £13.21 an hour on 1 April 2027, as the Low Pay Commission recommended.
• The Bank Corporation Tax Surcharge rises from 3% to 6% from 1 January 2027 to 31 March 2028, to help fund the energy support.
• Smaller tax and benefit changes for households, with their official costings in Table 2.

Table 2: Other household measures we don't model, official costings (£ million)

Measure (number)	What changes	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Student loans (83)	A 6% cap on interest on Plan 2 and Plan 3 loans from 1 September 2026 to 31 August 2027	−230	−172	−12	−10	−3	−15
Universal Credit (8)	The £2,500 surplus earnings threshold stays for a year from 1 April 2027	0	−142	0	0	0	0
Mileage rates (5)	55p a mile for the first 10,000 business miles from April 2026; 35p above that from April 2027	−28	−199	−222	−224	−237	−245
Bus fares (4)	A £2 cap on single fares in England outside London for 2027, which the government pays for by reprioritising DESNZ budgets; the costing includes the reprioritisation	−50	−181	+63	+170	0	0
Cash ISAs (11)	The cash ISA limit stays at £20,000	0	−4	−20	−35	−52	−72
Lifetime ISA (39)	The withdrawal charge falls from 25% to 20% for first-time buyers of homes above the £450,000 price cap	−17	−20	−21	−23	−25	−26
Founders' Relief (26)	A new Capital Gains Tax relief for qualifying founders, from April 2027	0	−258	−180	−261	−283	−302
Business Asset Disposal Relief (60)	The lifetime limit falls from £1 million to £500,000 from April 2027	+3	+60	+178	+253	+279	+303
Distributions (49)	Fewer ways for shareholders to take profits out of a company as capital gains where dividend tax fits better, from April 2028	0	0	+55	+802	+775	+785
Private hire VAT (59)	Larger operators pay VAT on the full fare from 2 January 2028	0	+93	+383	+394	+409	+423
Company car tax (86)	Benefit-in-kind rates for 2030-31 rise 1 point above 2029-30's, up to 40%	0	0	0	0	+312	+343

Source: the OBR's detailed forecast table 1.1, each measure's total; the number in brackets is its measure number there, the same as its row in the Budget's Table 6.1. Table 6.1 rounds the same totals to the nearest £5 million. A negative number is a cost to the public finances.

We run the seven measures together as one package, in a single simulation for each year. We leave out the savings income rate rise until our estimate is ready.

The package costs £3.11 billion in 2026-27, almost all of it the energy payment, the VAT cut and the fuel duty cut. In 2027-28 the VAT and fuel duty cuts run to July, and the property income rate rise begins. From 2028-29 the property income rise outweighs the Pension Tax Allowance and the trading allowance, and the package raises money.

Table 3: Budgetary impact of the seven measures (£ million)

	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
PolicyEngine, the package	−3,110	−615	+210	+166	+301	+281
Official, the same seven measures	−3,935	−1,122	+235	+85	+248	+150
Table 6.1 total, the same measures	−3,955	−1,095	+260	+120	+280	+180

Official: the sum of the seven measures' official lines in Table 6, from the OBR's detailed forecast table 1.1. Table 6.1 total, for context: the sum of rows 1, 2, 3, 7, 15, 52 and 61 of the Budget's Table 6.1. A negative number is a cost to the public finances. The package differs from the sum of the seven measures, when we run each on its own, by less than £1 million in every year. We explain the differences from the official costings below.

In 2026-27 the package raises net income in every decile, and by more as a share of income lower down the distribution. The energy payment is a flat £100, worth £68 to £73 per household on average in each of the bottom eight deciles and £47 in the highest, and the VAT and fuel duty cuts are also larger as a share of income for lower-income households. In 2027-28 every decile but the highest still gains. From 2028-29 the changes are small; in 2029-30 the top four deciles lose on average, the highest most, as property income tax rises.

Change in household net income by income decile

Table 4: Average change in household net income by income decile (£ a year)

Income decile	2026-27	2027-28	2029-30
1 (lowest)	+104	+24	+6
2	+107	+23	+6
3	+107	+22	+6
4	+109	+23	+2
5	+108	+27	+1
6	+108	+29	+4
7	+109	+30	−3
8	+110	+27	−6
9	+107	+17	−21
10 (highest)	+98	−12	−51
All	+107	+21	−6

We rank households into deciles by their income before housing costs under the Households Below Average Income definition, which adjusts for household size, with each decile holding about a tenth of people. The chart and Table 4 cover only the seven measures in Table 1, and none of the Budget's other measures.

The Treasury's analysis of the Budget's effect on households in 2027-28 (its Figures 1.A and 1.B) covers 18 of the Budget's measures (paragraph 1.4). Five of them are among ours. It includes the savings income rate rise, which we leave out, and leaves out the Household Energy Payment and the Carer's Allowance change. So its decile figures cover a different set of policies from ours. It finds that in 2027-28 the lowest-income households gain most as a share of income, that tax rises fall mostly on the highest-income households, and that on average all but the top 20% of households gain.

Table 5: Share of people by the change in their household's net income

	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Gain	98.6%	90.0%	3.4%	3.9%	1.2%	1.2%
Lose	0.0%	4.7%	5.6%	5.6%	5.8%	5.7%
No change	1.4%	5.3%	91.1%	90.5%	93.0%	93.0%

A household gains or loses when its net income changes by more than 0.01%.

In 2026-27 almost everyone gains, from the energy measures. From 2028-29 more than nine in ten people live in households the package leaves unchanged. The losses come almost entirely from the property income rate rise, and the gains from the Pension Tax Allowance, to 2029-30, and the trading allowance.

The Gini index of income inequality falls by 0.17% in 2026-27 and by 0.05% in 2027-28, and by 0.03% or less in each later year.

Household Energy Payment. A one-off £100 for households in council tax bands A to D in England, with payments from January 2027. We estimate it costs £1,969 million in 2026-27, which at £100 each is 19.7 million households; the government says up to 20 million. It raises net income by £67 per UK household on average. Our analysis of the energy bill measures has the details.

Zero VAT on household electricity. The 0% rate runs to 1 July 2027, and the Budget expects it to apply in Northern Ireland from April 2027. Like the Treasury, we cost the whole period, including the months already in force this winter: £840 million in 2026-27 and £353 million in 2027-28. In 2026-27 it raises net income by £29 per household on average, and about 94% of people live in households that gain. See our energy bills analysis.

Fuel duty. The 5p cut now runs to 1 July 2027, and the RPI rise due in April 2027 moves to the same day. We estimate it costs £301 million in 2026-27 and £521 million in 2027-28, including the VAT on the lower pump price. In 2027-28 it raises net income by £18 per household on average. See our fuel duty analysis.

Pension Tax Allowance. From 6 April 2027 to 5 April 2030, people above State Pension age, or reaching it during the tax year, whose total income is no more than the full new State Pension pay no income tax; in 2027-28 the allowance is worth up to £94, and above that income it falls by £1 for every £3. We estimate a net cost of £30 million in 2027-28, £83 million in 2028-29 and £144 million in 2029-30, after lower spending on Pension Credit, Housing Benefit and Council Tax Reduction. About 3% of people live in households that gain in 2029-30. See our Pension Tax Allowance analysis.

Property income tax. From 6 April 2027 the rates on property income rise 2 points, to 24%, 44% and 49% in England, Wales and Northern Ireland. We estimate it raises £399 million in 2027-28, rising to £459 million in 2031-32. In 2029-30, about 6% of people live in households that lose, and the highest-income decile loses £62 a year on average. See our property income tax analysis and the dashboard.

Trading allowance. From 6 April 2027 the first £3,000 of trading and miscellaneous income each year is tax-free, up from £1,000. We estimate it costs £110 million in 2027-28, rising to £130 million in 2031-32. About 1% of people live in households that gain. See our trading allowance analysis and the dashboard.

Carer's Allowance taper. Today a carer who earns more than the weekly earnings limit loses all of Carer's Allowance. During 2030-31, once a new IT system is in place, carers in England and Wales will instead keep the allowance less £1 for each £1 they earn above the limit. We count half of 2030-31 and estimate a cost of £24 million that year and £48 million in 2031-32. The Budget puts the number of carers who benefit at around 48,000. See our Carer's Allowance taper analysis and the dashboard.

We compare each measure with the government's costing, which the OBR certified, using the line in the OBR's detailed forecast table 1.1 that matches what we model. Fuel duty is the exception: its official figure is the government's estimate, which the OBR used but could not certify. The Budget's Table 6.1 rounds each measure's total to the nearest £5 million and includes the measure's other lines, so we give it for context only.

Our estimates differ from the official costings for four main reasons: timing (we score each tax year's liability; the official costings are on a National Accounts basis, in which Self Assessment payments can fall in a later year), coverage (we use household survey data, so we estimate less fully the effects outside households and on incomes the survey records thinly), behaviour (ours are static; most official costings include responses) and scope (the parts of a policy each models).

Table 6: PolicyEngine and official costings by measure (£ million)

Measure		2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Household Energy Payment	PolicyEngine	−1,969	0	0	0	0	0
	Official: PSCE in RDEL	−2,627	0	0	0	0	0
	Table 6.1 total	−2,625	0	0	0	0	0
Zero VAT on electricity	PolicyEngine	−840	−353	0	0	0	0
	Official: VAT	−734	−296	0	0	0	0
	Table 6.1 total	−755	−305	0	0	0	0
Fuel duty	PolicyEngine	−301	−521	0	0	0	0
	Official: Fuel Duty	−574	−782	0	0	0	0
	Table 6.1 total	−575	−780	0	0	0	0
Pension Tax Allowance	PolicyEngine	0	−30	−83	−144	0	0
	Official: Income tax	0	−44	−83	−144	+49	−15
	Table 6.1 total	0	−45	−90	−150	+50	−15
Property income tax	PolicyEngine	0	+399	+412	+429	+446	+459
	Official: Income tax	0	0	+539	+394	+403	+412
	Table 6.1 total	0	+35	+575	+435	+445	+455
Trading allowance	PolicyEngine	0	−110	−118	−119	−120	−130
	Official: Income tax and NICs	0	0	−221	−165	−171	−178
	Table 6.1 total	0	0	−225	−165	−175	−180
Carer's Allowance taper	PolicyEngine	0	0	0	0	−24	−48
	Official: Welfare inside cap	0	0	0	0	−33	−69
	Table 6.1 total	0	0	0	0	−40	−80

Official: the OBR's detailed forecast table 1.1, measures 1, 2, 3, 52, 61, 15 and 7, the line or lines that match what we model, under the table's own names. Table 6.1 total: HM Treasury, Table 6.1, rows 1, 2, 3, 52, 61, 15 and 7. Its totals also include the OBR table's other lines for each measure that aren't zero: Other AME (current) for zero VAT; PSCE in RDEL, Scottish BGA (current) and Scottish self-financed expenditure for the Pension Tax Allowance and the trading allowance; Onshore CT, Scottish BGA (current) and Scottish self-financed expenditure for property income tax; and Scottish BGA (current) for the Carer's Allowance taper.

Why each differs. The reasons come from the dashboard's notes on its comparison with the official costings, from the OBR's October 2026 Economic and fiscal outlook and from the Budget documents. The notes explain the comparisons and also draw on further runs of our model, so some of their figures aren't in Table 6 or in our published results:

• Household Energy Payment (scope). Ours falls 25% below the official £2,627 million because the official figure also covers two things we don't model: the devolved governments' share of the funding (about £425 million, our estimate using the Barnett formula) and £100 million for councils in England to target support at the households that rising energy bills hit hardest. Without them, about £2,100 million remains for the payment in England, and ours is 94% of that. At £100 each, the up to 20 million households the Budget names take up to £2,000 million of it; neither the OBR nor the Budget itemises the rest.
• Zero VAT on electricity (coverage). Ours exceeds the OBR's VAT line by £106 million (14%) in 2026-27 and by £57 million (19%) in 2027-28. The official costing also covers charities, residential care and some businesses, and counts households switching from gas to electricity; both make the official figure larger, so neither explains the gap. The two start from different spending: we calculate ours from the Department for Energy Security and Net Zero's domestic electricity volumes and the average prices households pay, then project that spending using CPI; the official costing starts from ONS consumer spending, which is 10% to 12% lower.
• Fuel duty (coverage). The official figure is the government's estimate, which the OBR used but could not certify. Ours is £273 million lower in 2026-27 and £261 million lower in 2027-28. Most of the gap is coverage: we count only the petrol and diesel households buy, about £13 billion of the £24 billion of fuel duty the OBR forecasts for 2026-27, while the official costing covers all taxable fuel, including fuel businesses buy. Scaling our fuel duty cost up to the OBR's fuel duty receipts would make it about £450 million in 2026-27 and £760 million in 2027-28. VAT and behaviour narrow the gap: ours includes £50 million and £87 million of VAT on the lower pump price, which the official fuel duty figure leaves out, and the official costing's demand response makes its cost smaller. The rest of the 2026-27 gap fits the official costing if it assumes the full 5p returns on 1 January 2027 (about £555 million on 45 billion litres), where the law brings it back as 3p then and 2p more from 1 March (about £410 million).
• Pension Tax Allowance (scope). Our income tax cost is £42 million, £112 million and £193 million in 2027-28, 2028-29 and 2029-30. The OBR's is £44 million, £83 million and £144 million (detailed forecast table 1.1), so ours is about 5% lower in 2027-28 and 35% and 34% higher in the next two years. We estimate that about 670,000 people gain in 2027-28, against the Treasury's 500,000. Table 6 shows our net cost, after Pension Credit, Housing Benefit and Council Tax Reduction take back part of the income tax cut; the measure's Welfare inside cap line in the OBR's table is zero. For 2028-29 and 2029-30 we set the allowance at £182 and £250 a year, from the October 2026 forecast of the State Pension. The official costing also has figures for 2030-31 and 2031-32. The Treasury's policy costing note gives no reason for these figures after the allowance ends; ours are zero.
• Property income tax (timing and behaviour). The official costing puts Self Assessment payments in a later year than the tax year they cover: the OBR adds almost no Self Assessment receipts from the savings and property rate rises in 2027-28 and £1.0 billion in 2028-29 (Economic and fiscal outlook, Table 4.4), so the official figures for those two years aren't comparable with our tax-year figures. From 2029-30 ours exceeds the OBR's income tax line by 9% to 11%. The official costing includes small behavioural responses, more tax-motivated incorporation and higher non-compliance, that reduce the yield by £0.1 billion a year (Economic and fiscal outlook, paragraph 3.17); ours leaves them out.
• Trading allowance (behaviour and coverage). From 2028-29 ours falls £46 million to £103 million a year below the OBR's income tax and NICs lines (27% to 47%), with the largest gap in 2028-29. The official costing includes people switching from deducting their actual expenses to the larger allowance, which we don't model. Without gross receipts in the survey data, we give traders with profits above £3,000 nothing from the change and give miscellaneous income no allowance at all, while for some profits between £1,000 and £3,000 we overstate the gain, because we leave them unrelieved under the current £1,000 allowance. In 2027-28 the OBR's lines have no cost and ours has £110 million. The dashboard gives the reason in its description of the comparison: the official costings are on a National Accounts basis, in which Self Assessment payments can fall in a later year, so a change such as the trading allowance can appear about a year later in them than in ours.
• Carer's Allowance taper. The measure's total in the OBR's table is £38 million in 2030-31 and £79 million in 2031-32, before the Treasury rounds it to the nearest £5 million. It includes £5 million and £10 million of extra block grant for Scotland, where the Scottish Government has responsibility for Carer's Allowance, and has no line for income tax. Its Carer's Allowance and Universal Credit spending is £33 million and £69 million (OBR, Economic and fiscal outlook, October 2026, detailed forecast table 1.1, measure 7). Ours, £24 million and £48 million, is net of the income tax on the higher allowance (£15 million and £32 million); before that tax, ours is £39 million and £79 million, about a sixth more than the OBR's spending.

From 6 April 2027 the income tax rates on savings income rise 2 points, on top of the rise in Budget 2025, to 24%, 44% and 49% across the UK. Interest in ISAs stays tax-free, and the Personal Savings Allowance and the starting rate for savings are unchanged.

Table 7: Official costing of the savings income rate rise (£ million)

	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Official: Income tax	0	+63	+483	+443	+475	+510
Table 6.1 total (row 62)	+15	+125	+555	+520	+555	+590

Official: the OBR's detailed forecast table 1.1, measure 62, the line that matches what we model. Table 6.1's total also includes the OBR table's Onshore CT line for the measure.

The official costing includes some savers moving their savings into ISAs and other tax-advantaged products. We hold our estimate back from this release while we update the savings income in our data; it follows with that update.

We plan to update these results later this week. The update will:

• add poverty and people-affected figures;
• add national figures for the savings income tax rise, once we have improved our savings income data (the calculator already includes it);
• apply the trading allowance to miscellaneous income as well as trading income, which will raise our estimate of its cost;
• correct how the Carer's Allowance taper interacts with overlapping benefits, such as the State Pension, in 2030-31;
• extend the fuel duty cut to road fuel gases (LPG and natural gas), as the government's costing does;
• give the Pension Tax Allowance to everyone who reaches State Pension age during the tax year.

We are also working on:

• projecting household electricity spending with retail energy prices rather than general inflation;
• adding the Budget's measures to PolicyEngine UK itself, so anyone using our open-source model can run them.

Our estimates come from PolicyEngine's Autumn Budget 2026 dashboard, which runs the policyengine Python package (version 6.11.1) with PolicyEngine UK (version 2.151.0) on Microcosm UK 2024-25, our survey-based dataset, which we calibrated before the Budget. Prices and earnings follow the OBR's October 2026 Economic and fiscal outlook: every simulation, with and without the Budget's measures, uses its growth rates for CPI, RPI, average earnings and house prices.

• Static. Each estimate holds behaviour fixed: people work, earn, save and spend as they would without the measure.
• Tax years. We score each tax year's liability, and put costs and gains in the fiscal year they relate to; the energy payment, for example, falls in 2026-27.
• Net income. Changes in household net income include changes in the VAT and fuel duty households pay, so a cut to either raises net income. Deciles rank households by their income before housing costs under the Households Below Average Income definition, which adjusts for household size, with each decile holding about a tenth of people.
• The package. The combined results come from one simulation of the seven measures together, which models each exactly as in its own run.
• Small samples. The dashboard withholds any result that rests on fewer than three survey households. For the package in 2030-31 and 2031-32, it withholds the results for two income deciles and the average change across all households, the same cells it withholds for the Carer's Allowance taper on its own.

Every PolicyEngine figure in this briefing comes from the dashboard's published results (manifest revision 17), and we read each from files that match the checksums in their receipt; the exceptions are the further figures we quote from the dashboard's notes on the comparison with the official costings, which come from further runs of our model. Every official figure comes from the OBR's October 2026 Economic and fiscal outlook or the Budget documents we link above.

PolicyEngine's UK Budget analysis is funded by the Nuffield Foundation. The views expressed are ours and not necessarily the Foundation's.