When Chancellor John Healey stood up to deliver the Budget, he said he was responding to ‘global economic storms’ caused by the wars in the Middle East and Ukraine.

They were driving up costs and inflation and hitting families and businesses, but he wanted to provide ‘breathing space now and fresh hope for the future’ for hard-pressed families.

He said the Budget was for the ‘working people of Britain’ and ‘British businesses big and small’, and that Labour had kept its promise not to raise taxes on working people.

But what do his announcements mean for you?

Some of us will be better off; others may feel the pinch, particularly if they rely on income from property or savings. Here’s how the announcements could affect you.

Q: Rising energy bills are my main worry. What does the Budget mean for me?

A: The Chancellor said bringing down energy bills was a priority. Some measures could help now, while others are intended to bring bills down over time.

He will extend the VAT cut on electricity, which was due to end in March 2027, until July 2027. It is expected to take around £50 off the annual Ofgem price cap in April 2027.

If your home is in council tax bands A to D in England, there’s even more help: you could receive a one-off £100 Household Energy Payment from January 2027.

For longer-term savings, the government says it will only build new energy projects that lower bills, while it plans to abolish gas standing charges in Great Britain by the end of 2027, with measures to make the change fair. It will also reform electricity standing charges, with details to follow next year.

But if standing charges are replaced by higher costs for each unit you use, the change could leave some households paying more. If you live in a larger or less energy-efficient home and use a lot of gas, you could face higher bills. If your home is well insulated and you use little gas, you could benefit.

‘The savings will depend heavily on individual circumstances,’ said Edward Gurney, founding director of the Solar and Battery Company and an energy expert.

Q: I drive a lot. Will the Chancellor help with rising petrol prices and costs?

A: A fuel duty cut took 5p off a litre of petrol and diesel when it was introduced on March 23, 2022. It has been extended several times since, and was due to run until December 31, 2026.

It will now be extended to July 1, 2027. The Budget estimates that fuel-duty decisions across this Parliament will leave the average car driver around £230 better off compared with the previous government’s plans.

If you use your own car or van for work, the tax-free mileage rate for your first 10,000 business miles is rising from 45p to 55p a mile. The increase is being made permanent.

If you drive more than 10,000 business miles in a year, the rate for each extra mile is rising from 25p to 35p from April 6, 2027. The government estimates that someone doing 6,000 business miles a year could save up to £120 in tax, while someone doing 15,000 miles could save up to £300.

Q: How about if I drive an electric vehicle?

A: The government is providing £100 million over two years to reduce costs at local, lower-powered public chargers. From spring 2027, it expects this to save around £150 a year for the average EV driver who has no home charger and relies on on-street charging.

: I’m on the minimum wage. Will I get a pay rise?

A: If you’re on the minimum wage, you’ll earn more. The current rate for workers aged 21 and over is £12.71 an hour. From April 1, 2027, the National Living Wage will rise by 3.9% to £13.21 per hour, adding £910 to the gross annual earnings of a full-time worker.

The rate for 18- to 20-year-olds will rise to £11.27, while the rate for 16- to 17-year-olds and eligible apprentices will rise to £8.31.

Q: I’m a carer. Will I be able to earn more?

A: At the moment, you generally need to care for someone for at least 35 hours a week and earn no more than £204 a week after tax, National Insurance and allowable expenses to claim Carer’s Allowance. It pays £86.45 a week.

The tricky bit is the ‘cliff edge’. Those who earn even slightly over the limit can lose the whole payment. The Chancellor says he will remove this cliff edge and instead earnings above the limit will be subject to a taper that reduces the benefit payment as earnings increase.

However, you will have to wait for this. The taper will be implemented during 2030–31 following the development of a new IT system that will automatically adjust payments in line with the taper.

Q: I’m a pensioner. Could I end up paying tax on my State Pension?

A: Your State Pension counts towards your taxable income, but tax is not taken off before it is paid to you. The standard Personal Allowance — the amount you can receive before paying income tax — is £12,570 and is frozen until April 2031.

The full new State Pension is now £241.30 a week, or £12,547.60 over a year. That leaves just £22.40 of the allowance spare, so even a small amount of other taxable income could mean you owe tax, while any rise in the pension amount due to inflation could leave you paying tax simply on the State Pension itself even if it is your only income, without the new Pension Tax Allowance.

Mr Healey said that from April 2027, people above State Pension age with total income up to and including the value of the new State Pension will not pay income tax thanks to the Pension Tax Allowance.

The allowance will apply until April 2030 and taper for people with incomes just above the full new State Pension. Around 500,000 pensioners are set to benefit, with around 290,000 paying no tax at all and the remainder receiving a tapered allowance, he said.

Q: I’m planning to start a family. Is there anything in the Budget for parents?

A: From April 2029, eligible self-employed fathers, partners and adopters in Great Britain will be able to receive parental pay for the first time.

The change will also help some people who are recently employed or unemployed, or have broken or irregular work patterns and don’t qualify for statutory paternity or adoption pay, provided they have sufficient work and earnings history.

The government estimates that more than 150,000 parents a year could benefit. The Budget doesn’t yet state how much the payment will be or for how long.

Q: I earn money from savings or property. Will I pay more tax?

A: Tax on income from property and savings will rise by a further two percentage points from April 2027, on top of the two-point rise announced last year. For savings income, the rates will be 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for those paying the additional rate.

The Chancellor said 84% of income-tax payers are forecast to be unaffected by the combined changes to tax on savings and property income.

Basic-rate taxpayers can receive up to £1,000 in savings interest tax-free, and higher-rate taxpayers up to £500, under the Personal Savings Allowance. The news makes it more important than ever for savers to use their ISA allowances, as interest paid within your ISA is tax-free.

Q: I save into a cash ISA. Will I still face a cut to the amount I can save?

A: Until recently, the plan was to cut the amount you could put into a cash ISA from £20,000 to £12,000 a year if you were under 65, starting on 6 April 2027. If you were 65 or over, you would still have been able to put in £20,000.

Younger savers could put any remaining allowance into another type of ISA, such as a stocks and shares ISA, which was an unpopular move with some.

Now this decision has been reversed. The cash ISA cut will not go ahead. Instead, the Chancellor will explore a new incentive for people investing in a stocks and shares ISA for the first time. There are no details yet on how this will work.

Experts on savings and investments called for certainty for savers. Kevin Mountford, co-founder of savings marketplace Raisin UK, said that his research shows that fewer than one in five people feel they understand the planned cash ISA changes.

‘Today’s change must be followed by a clear explanation of the allowance, who it applies to and when. Savers need certainty they can plan around,’ he says.

Q: I’m a renter, is there anything to help me?

A: Despite rising rents, there was little to directly help renters in the Budget, and the independent Office for Budget Responsibility (OBR), which looks at the impact of government budget decisions, has previously suggested that increasing property income tax could ultimately increase rents by reducing the supply of rental properties, as more landlords leave the business.

If you want to get on the housing ladder, though, there were three new announcements.

The first is for those who have an existing Lifetime ISA which they are using to save for a home. If they buy a first home worth over £450,000 and the purchase otherwise meets the scheme’s rules, the withdrawal charge will fall from 25% to 20%.

The £450,000 limit for charge-free withdrawals remains, and the usual 25% charge still applies to other unauthorised withdrawals.

There will also be a new First-time buyer ISA to replace the current Lifetime ISA for new savers, as well as a scheme to help more people onto the housing ladder called Your First Home, which had already been announced at the Labour Party Conference.

The scheme was cautiously welcomed by experts in the industry, although it seems to be limited to those wanting to buy a newbuild home in England, through participating developers.

James Nightingall, founder of property search service HomeFinder AI, said: ‘The Your First Home scheme looks promising on paper and whilst it might not be the best solution for everyone, it will undoubtedly enable and motivate first time buyers to get on the property ladder.’

The new First Time Buyer ISA will not come in until 2029, however, and it seems it will still only allow you to buy a home worth up to £450,000, which experts said would cut out many properties in London, for example.

‘Retaining the £450,000 property cap risks carrying an old problem into a new product. A lifetime limit on the government bonus could be a fairer way of controlling costs than a rigid house-price ceiling that becomes increasingly outdated as property prices rise,’ said Rachael Griffin, tax and financial planning expert at wealth manager Quilter.

Q: Will my pint or glass of wine go up in price?

A: If you like your pint from a smaller brewer, you might find it’s cheaper, since Mr Healey announced £10,000,000 a year in alcohol duty relief for more than 2,000 small British brewers and cider makers.

That could cut the price you pay if producers pass the saving on. If you like lower alcohol products, there’s good news too, as the government is introducing stronger tax incentives for producers of drinks below 3.5% alcohol by volume. Any savings for you will depend on whether producers pass it on.

Q: What about my grocery bill?

A: Tariffs on 100 products have been cut, so if you buy those products, you might see a small reduction. The products affected include marmalade, baked beans, chocolate-coated wafers and gherkins – so it’s a bit of an eclectic mix.

Together with the tariff reductions already announced by the government in the summer, these changes will save households up to £21 a year on their food shop, according to the government. How much reaches shoppers will depend on how much of the savings is passed on. So unless you’re Paddington Bear there isn’t much to get excited about here.

Q: I run a small shop, restaurant or gym. What changes for my business?

A: If you run a small business, the threshold for small business rates relief will rise from £12,000 to £18,000 for qualifying retail, hospitality and leisure properties in England. The tapered-relief threshold will rise from £15,000 to £21,000. That should mean more businesses pay no rates at all.

The government says half of retail, hospitality and leisure properties in England will pay no business rates. If your business is in one of those sectors but does not qualify for full relief, rates will be frozen in real terms.

Q: If I like to gamble, will the tax rise affect me?

A: From April 2027, Machine Games Duty will rise from 20% to 25% on higher-stake machines, with stakes over £1. The government says the existing rate will remain for lower-stake machines in pubs and seaside arcades.

Q: I have a small side hustle – any good news for me?

A: Yes! At the moment you can make £1,000 from your side hustle without paying income tax. This will rise to £3,000 from 6 April 2027. The allowance covers qualifying trading and miscellaneous income.

Q: What’s the overall message for me?

A: The Budget promises ‘breathing space now, fresh hope for the future’. If you’re facing higher bills, the immediate help may offer some relief, while the longer-term changes are intended to bring costs down. What you actually gain will depend on your circumstances and on how the new measures work in practice.

Your circumstances: how the Budget will affect you

The young family

Nigel and Yvonne have two young children. Both work full time on the minimum wage. Based on today’s Budget, they’ll get some help with rising costs.

From April next year, each will earn about £910 more over a full year before tax and National Insurance — £1,820 between them. They’ll also receive a one-off £100 Household Energy Payment in January, if they live in an eligible council tax band A to D home in England. The extended electricity VAT cut is expected to save them around £50 on the annual price cap from April 2027.

Nigel drives 6,000 business miles a year in his own car and claims mileage tax relief. The Budget estimates the higher mileage rate could save him up to £120 a year. The wider fuel-duty decisions are expected to leave an average driver around £230 better off across this Parliament, compared with the previous government’s plans.

Yvonne sells crafts on Etsy. From April, the tax-free Trading Allowance will rise from £1,000 to £3,000. If she has at least £3,000 of qualifying trading income and uses the allowance, that could save her up to £400 in income tax at the basic rate.

Together, these measures could be worth about £2,720 across different periods, before any tax or benefit changes. The total includes £1,820 in extra gross wages, £150 in estimated energy support, £120 in mileage tax savings, £230 in fuel-duty savings and up to £400 in income tax saved on Yvonne’s Etsy income.

The single first-time buyer

Zara is saving for her first home and doesn’t have family money to help with a deposit. If she qualifies for the new Your First Home scheme, she could get a 20% equity loan, with just a 2.5% deposit. The first five years of the loan will be interest-free, with charges rising gradually after that.

For example, on an eligible £250,000 home, a 2.5% deposit would be £6,250 and a 20% equity loan would be £50,000, leaving a £193,750 mortgage. The loan could make buying possible sooner, but it is still a loan.

From April 2029, a new First Time Buyer ISA will offer a 25% government bonus on savings used to buy a qualifying first home worth up to £450,000. Save £4,000 and the bonus could be £1,000; the maximum bonus is £20,000. That help is still some way off, and how much Zara gets will depend on how much she saves.

There’s no one savings total for Zara but she could buy a property more quickly. The equity loan is repayable, and her ISA bonus depends on her savings. But on a £250,000 eligible home, the scheme could provide £50,000 towards the purchase, alongside her £6,250 deposit.

The carer

Louise cares for her mum for at least 35 hours a week and receives Carer’s Allowance. Under the current rules, she can generally earn up to £204 a week after tax, National Insurance and allowable expenses. The allowance is currently £86.45 a week. If she earns even a penny over the limit, she can lose the whole payment.

The Budget plans to replace that cliff edge with a gradual reduction, but the new taper is not due until 2030–31. For every £1 Louise earns above the limit, her Carer’s Allowance will reduce by £1.

At today’s allowance rate, if Louise earned £30 a week over the limit, she would keep £56.45 of her Carer’s Allowance instead of losing all £86.45. That’s about £2,935 more allowance over a year than under the current cliff-edge rule, if she stayed £30 over the limit for a full year and using today’s rate. But she’ll have to wait until 2030 for the change.

The pensioner couple

Margaret and Peter both receive the full new State Pension and live in an eligible council tax band A to D home in England. Their household could receive a £100 energy payment in January 2027, and the extended electricity VAT cut is expected to reduce the annual price cap by around £50.

From April 2027, the new Pension Tax Allowance is intended to stop pensioners whose total income is no higher than the full new State Pension being drawn into paying tax because of State Pension increases. This could save them tax, but it’s impossible to say how much yet.

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