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Autumn Budget 2026: Key Highlights

UK Investor Magazine
By UK Investor Magazine

Chancellor John Healey’s first Budget wasn’t anticipated to be the most exciting of recent years, and it lived up to expectations. But Healey took baby steps to improve the investment environment, support entrepreneurs, and reassure bond markets.

The Chancellor started with a rundown of the pressures facing the UK economy, including the war in Iran and higher oil prices, almost as a subtle excuse for what was to come.

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Markets appreciated the Chancellor’s commitment to fiscal discipline, with 10-year gilt yields falling and the FTSE 100 rising in the immediate reaction. The admission that the UK government will spend £14bn more on service debt costs this year left little wiggle room, making this budget one of the more benign of recent years.

That said, although the budget lacked major tax changes, it was overtly business-friendly and should help animal spirits, albeit from a low base. Today’s measures were small, but they were certainly a step in the right direction.


Autumn Budget 2026: Key Highlights

Economic Forecasts

The OBR has downgraded the UK’s growth forecasts more than had been expected.

New forecasts:

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2026: 1.2%
2027: 1%
2028: 1.6%
2029: 1.8%
2030: 1.7%
2031: 1.6%

Tax

Importantly, capital gains tax will not change, except for additional benefits for entrepreneurs.

Small business rates relief will rise from £12,000 to £18,000.

HMRC will get extra powers to recover tax owed by those who refuse to pay. The Chancellor also said HMRC would tackle tax avoidance and evasion. We’ve heard this from the dispatch box before to little effect.

In a boost to investors, dividend tax remained unchanged. But interest income tax and property income tax rose by 2%. Along with the ISA changes below, this should encourage more people to invest in the stock market rather than keep it in cash.

Energy Prices

The Chancellor announced two tax cuts related to energy bills. The first is £100 payment to households in council tax bands A-D. The second was the VAT cut on electricity bills

To help fight the pressure of rising petrol prices, the UK government will extend the 5p fuel duty cut to July 2027.

Support for Entrepreneurs

The government announced new support for founders: when they sell shares in a qualifying UK business they helped build, they pay Capital Gains Tax at just 10% on the profit, up to a lifetime total of £10 million.

ISAs

The limit will stay at £20,000, and the government has scrapped changes to the Cash ISA.

“The Government’s decision to leave Cash ISAs as they are is the right one,” said Matt Benchener, Chief Executive Officer, Hargreaves Lansdown.

“For many of our more than two million clients, a Cash ISA is an important first step towards investing: one in five who open one with HL go on to open an investment account within six months. Every investor is a saver first, and engaged savers can become long-term investors with the right education and guidance. Keeping that on-ramp open aligns with the Government’s ambition to build a nation of investors.”

A new ‘starter ISA’ scheme will encourage first-time investors. This should be welcomed.

The Lifetime ISA will be scrapped and replaced with a new First Time Buyer ISA. For Lifetime ISA users, the penalty for buying a house above the limit will be removed, so people get back at least what they put in. Increasing the house price limit would have been a better option for these savers given it’s only £450,000.

Banks

Banks will pay an extra 3% on the surcharge. This was lower than expected and acted as a clearing event for banks, with Lloyds shares jumping in the immediate reaction. Some had feared a 5% to 8% surcharge.

Defence

Some may have expected more the Chancellor here given his background. Healey said they would release plans to meet the 3.5% spending target in the upcoming review while outlining measures to support investment in the sector.

Babcock and BAE Systems shares rallied through the budget.

“We could have done with some details, but it looks like defence will get the money Healey said was needed when he was defence secretary. The precise path will come through next year, but it seems like the spending bonanza for Rolls-Royce and others is still on the way. It just might take a little while to arrive,” said Chris Beauchamp, Chief Market Analyst UK at IG.

“Fiscal Devolution“

Local government will now get a share of income tax. By the end of the decade, local mayors will receive 100% of business rate tax.

Housing

The Labour government set out with a target to build 1.5 million houses. It will miss the target by a country mile.

To tackle this, £1.5bn is being allocated to social housing and land sold to social housing providers will be VAT-free.

The biggest impact on the housing market may come from the First Time Buyer scheme, which will allow purchases with a 2.5% deposit and a 20% equity loan. This is Help to Buy 2.0.

“The Your First Home scheme is simply a moderate rebound from the Conservative’s Help to Buy Scheme,” said Sarah Bush, Head of Residential at Cheffins.

“Currently, it’s not clear who the biggest winners will be out of this scheme – first time buyers or developers. As the scheme is only applicable to new homes, the Your First Home scheme will not light up the rest of the stagnating property market.”

Wages

The National Living Wage will rise to £13.21 an hour and the 18-20 National Minimum Wage to £11.27. The increase for younger workers was lower than expected.

Gambling

The government will hike taxes on the scourge of the high street, which is gambling shops with high-limit machines. Pubs and seaside arcades will be protected.

AI & Data Centres

The Chancellor launched a new data centre covenant to boost AI sovereignty. Details are still coming through but the government seems keen to balance the demand for AI compute with the resistance it is facing from local communities

Government departments will invest in AI to improve efficiency.

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