UK Budget 2026 Highlights: Treasury chief John Healey presents his first budget, check latest updates

British Chancellor of the Exchequer John Healey today presented his first Budget statement, announcing a slew of measures to ease the cost-of-living crisis, supporting businesses, helping first-time homebuyers and strengthening the country's defence capabilities.

Healey, who was appointed chancellor in July after Andy Burnham became prime minister, emerged from his office at 11 Downing Street with his Treasury team and the traditional red Budget briefcase a little over an hour before his scheduled speech.

Also Read: All About Your First Home scheme


The Budget comes as UK inflation has climbed to a near one-year high of 3.5%, with the Iran war driving up fuel prices. Inflation is expected to rise further in the coming months, potentially prompting the Bank of England to increase interest rates. Higher borrowing costs could add to the government's debt-servicing burden.

UK Budget 2026 Highlights

• First-time buyer ISA: The government announced plans to replace the Lifetime ISA with a First-Time Buyer ISA to help people save towards purchasing their first home, reported BBC.
• Your First Home Scheme: Healey announced a new initiative aimed at helping first-time buyers get onto the property ladder.
• Defence finance taskforce: The UK will establish a new defence finance taskforce to support defence-related funding and investment.
• Additional support for Ukraine: The UK announced £10 billion in additional economic and military support for Ukraine.
• Higher tax-free allowance for new ventures: Healey announced plans to increase the trading allowance from £1,000 to £3,000, allowing people to earn more from new ventures without paying tax on that income, according to the BBC.
• Business rates relief: The government will reduce business rates to zero for 70,000 businesses by increasing the threshold for properties subject to the tax from a rateable value of £12,000 to £18,000.
• Additional levy on banks: Banks will face an extra three-percentage-point surcharge on their profits to help fund immediate support for households facing higher energy bills. The temporary measure will begin in January and remain in place for 15 months.
• Fuel duty cut extended: The existing 5p-per-litre reduction in fuel duty will continue until July next year.
• VAT relief on electricity bills: The government will extend the zero-rate VAT relief on electricity bills until July, beyond the previously scheduled end date of March 2027. Healey said the measure would reduce the annual energy price cap by £50.
• £100 energy payment for households: Around 20 million households in council tax bands A to D will receive a £100 payment this winter to help cover rising energy costs. The money will be paid directly into bank accounts. Healey said the scheme would cost £2.6 billion.
• Improved economic growth outlook: Healey said the Bank of England has upgraded its forecast for UK economic growth this year. The International Monetary Fund also raised its growth outlook earlier this month.
• Government borrowing to decline: The chancellor said borrowing is projected to fall to 1.8% of gross domestic product (GDP) by the 2030-31 financial year.
• Debt-to-GDP ratio: The UK's debt as a share of GDP is forecast to fall to 81.7% in the 2031-32 financial year, Healey said.
• Reduced fiscal headroom: The Office for Budget Responsibility (OBR) estimates that the government's financial headroom will decline from £24 billion to £15 billion.