Chancellor John Healey has unveiled a series of measures aimed at easing the cost of living, supporting pensioners and helping households manage their finances.
From £100 energy payments and changes to pension tax to a freeze on the cash ISA allowance and new help for first-time buyers, the Budget contains several announcements that could affect what people pay, save and receive.
Here are 12 key changes and what they could mean for your money.
1. £100 energy payment for millions of households
Around 20 million households in council tax bands A to D will receive a £100 payment directly into their bank accounts this winter to help with rising energy bills.
The Government said the scheme would cost £2.6billion and provide support during the coldest months.
The Chancellor also extended the cut to VAT on electricity until July, which he said would take £50 off the annual price cap.
2. Pensioners to benefit from a new tax allowance
Pensioners whose income is no higher than the value of the full new State Pension will not pay income tax under the Government’s new pension tax allowance during this Parliament.
The measure is intended to protect pensioners receiving the full new State Pension from income tax as payments rise.
However, pensioners with additional private pensions, earnings or savings interest could still need to consider their total taxable income.
3. State Pension set for a 3.9% rise
More than 13 million State Pension recipients are set to receive a 3.9% increase from April next year under the triple lock.
The increase will provide a boost to pensioners’ regular income, although the amount each person receives will depend on their entitlement and whether they receive the new or old State Pension.
The Chancellor also promised that every penny of the pension fund surplus for ex-mineworkers would go to miners, alongside a commitment to continue working towards the full transfer of the guarantor’s fund.
4. Gas standing charges could disappear in 2027
Martin Lewis said the Chancellor had told him that gas standing charges would be scrapped in 2027.
The MoneySavingExpert founder said the charge currently costs around £108 a year, but warned that the cost would be shifted to unit rates.
That means households would pay more for each unit of gas they use instead.
Mr Lewis estimated that around 60% of people could pay less, while 40% could pay more, depending on their consumption.
The Chancellor is also expected to discuss removing electricity standing charges with Ofgem, although this is considered more complicated.
5. Fuel duty cut extended until July 2027
Motorists will continue to benefit from the 5p-a-litre fuel duty cut until July 2027.
The Chancellor said the extension would help households, hauliers and farmers amid continued pressure on fuel prices.
He also announced that the higher mileage allowance for people using their cars for work would increase from 25p to 35p per mile. The increase to the standard mileage rate introduced earlier this year will also become permanent.
6. Cash ISA allowance stays at £20,000
Savers will be able to continue putting up to £20,000 a year into a cash ISA without paying tax on the interest.
The Chancellor abandoned a planned reduction to the tax-free cash ISA limit, saying the allowance would remain unchanged for people of all ages.
He also announced plans to work with the sector to create a new Starter ISA aimed at rewarding first-time investors.
The decision will be welcome news for savers who want to keep their money in cash while protecting the interest they earn from tax.
7. First-time buyers get new help to buy a home
The Chancellor announced £4.7billion in Government-backed lending for a new Your First Home equity loan scheme, due to launch next spring.
The scheme is intended to help first-time buyers who do not have financial support from family.
He also announced plans for a new First Time Buyer ISA to replace the Lifetime ISA.
In addition, the Government will end the Lifetime ISA penalty for people buying homes costing more than £450,000. Those affected will get back at least what they paid in, according to the Chancellor.
The changes could be significant for aspiring homeowners struggling to save a deposit or facing property prices above the existing Lifetime ISA limit.
8. Minimum wage and National Living Wage rise by 3.9%
The National Minimum Wage and National Living Wage will increase by 3.9%, benefiting 2.3 million of the lowest-paid workers.
The Chancellor said the increase was intended to help people manage everyday costs, including the weekly shop.
The actual benefit will depend on the rate each worker currently receives, their age and the number of hours they work.
9. Carers to get protection from the earnings cliff edge
The Government will change Carer’s Allowance rules so people no longer lose their entire benefit because they earn just a penny above the earnings limit.
The Chancellor said the cliff edge would be removed, allowing carers to keep some support as their earnings rise.
The change is intended to make it easier for people to combine paid work with caring responsibilities without risking the loss of their entire allowance over a small increase in income.
10. More than 100 supermarket products could become cheaper
The Government is suspending tariffs on more than 100 supermarket products in an attempt to keep prices down.
The Chancellor said the move was intended to help households with the cost of the weekly shop.
The impact on individual shoppers will depend on how retailers pass on any savings, so it does not guarantee that every affected product will become cheaper.
11. Self-employed people could face smaller tax bills at a time
The Chancellor announced changes to how self-assessed income tax is collected, with affected taxpayers expected to make smaller, more regular payments rather than facing large bills that can be harder to pay.
The changes could help people manage their cash flow and budget for tax more consistently.
However, the announcement concerns the timing of payments rather than an automatic reduction in the amount of tax owed.
The Chancellor also announced that the tax-free trading allowance for people earning money from a new venture would rise from £1,000 to £3,000.
12. Self-employed fathers to qualify for paid parental leave
Self-employed fathers and partners will become eligible for paid parental leave for the first time.
The Chancellor described the announcement as a first step towards wider change, saying he had listened to calls from MPs about paternity leave.
The measure could provide additional financial support to eligible self-employed parents following the arrival of a child.
The announcement did not set out all the detailed eligibility rules or payment arrangements, so further information will be needed to establish exactly who qualifies and how much they will receive.
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- Minimum wage to increase to £13.20 an hour as John Healey announces Budget pay boost
What does the Budget mean for your money?
The biggest immediate help announced by the Chancellor includes the £100 energy payment for eligible households, the extension of the electricity VAT cut and the continued fuel duty reduction.
Pensioners will also be watching the new pension tax allowance and the 3.9% State Pension increase, while savers have been given certainty that the cash ISA allowance will remain at £20,000.
Other measures, including the gas standing charge changes and new first-time buyer support, will take longer to come into effect.
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