The Chancellor's first Budget puts most of its household help into energy bills. Some of it is already in place. Much of it is not, and the plan to scrap gas standing charges has no fixed start date and no published effect on any individual bill.

Households in England living in council tax bands A to D will get a one-off £100 payment towards their energy costs from January 2027, the Chancellor, John Healey, announced in his Budget on 28 October 2026.

The government also wants the standing charge, the fixed daily fee on gas bills, removed. It has asked the energy regulator, Ofgem, to do this in 2027 or as soon as possible after. The money it raises will not disappear: it will be collected through the price of each unit of gas instead. Whether a household pays less overall will depend on how much gas it uses and on the new unit rates, which have not been set.

The Budget also extends a VAT cut on household electricity, raises the minimum wage from April, abandons a planned cut to the cash ISA allowance and puts a higher tax rate on savings interest. Here is what each change means, who it covers and when it starts.

The £100 Household Energy Payment

The payment is for households in England that are liable for council tax on their main home in bands A to D. The government says up to 20 million households could receive it, at a cost of £2.6 billion.

Payments start in January 2027. If you pay council tax by direct debit, the Department for Energy Security and Net Zero (DESNZ) says you do not need to do anything: the money goes straight into your bank account. Other eligible households will be contacted by their council and asked to apply. DESNZ says most households exempt from council tax are included, but second homes and empty properties are not. The full eligibility criteria have not been published.

Councils in England will get a separate £100 million to help households outside bands A to D, using criteria each council sets itself. Scotland, Wales and Northern Ireland will receive extra funding through the usual Barnett formula, and their governments will decide how to use it. None of them has yet said what that support will be.

The one-off nature of the payment matters. It is £100 for 2027, not a monthly or annual reduction.

DESNZ has also issued a warning: "Nobody other than your council should get in touch asking you to claim the rebate." A message from anyone else asking for bank details is a scam. Our guide to avoiding and reporting energy scams explains what to look for.

No VAT on electricity until July 2027

This measure is already operating. VAT on household electricity was cut from 5% to 0% on 1 October 2026. The Budget extends the cut by three months, to July 2027. VAT on gas has not changed.

The Treasury expects the extension to take around £50 off the annual Ofgem price cap in April 2027. That is an estimate for a typical level of use. The actual saving rises or falls with how much electricity a household uses.

The cut now has an end date. Unless a future decision extends it again, VAT on household electricity is due to return in July 2027.

What scrapping gas standing charges would actually do

A standing charge is the daily amount you pay to be connected, before you use any gas. It appears on your bill even in a month when you use very little. The Budget document puts the gas standing charge at £108 a year on average.

Removing it would not remove the costs it pays for, such as running the gas network. Suppliers would recover them through the unit rate instead, so every unit of gas would cost more.

That changes who pays. Households that use little gas would generally pay less, because they would no longer pay a fixed fee regardless of use. Households that use a lot could pay more.

The government's own figures reflect this. Its announcement says about 60% of account-holding households could save around £45 a year on average. That also means roughly 40% would not see an automatic saving. The government says it will "set out in due course" targeted help for a small number of households, which in practice is likely to mean high users who cannot easily cut back, such as people who are at home all day for health reasons. No detail has been given.

The timing is also open. The Budget document says the government wants the change by the end of 2027 or as soon as possible after. Ofgem has to design it first, and suppliers would then need to reprice their tariffs. Until that happens, gas standing charges stay on bills, and the energy price cap still limits them.

Electricity standing charges are not being abolished. The Budget says they will be "reformed", with details to follow next year.

Help with energy debt

Household energy debt is more than £5 billion, according to the Budget document. The government is introducing an Energy Debt Circuit Breaker, which DESNZ says will start with one-off debt relief through a Debt Relief Scheme. It is aimed at billpayers on means-tested or disability benefits, or of pension age, who built up debt after the 2022–24 energy crisis and agree to work with their supplier to pay it down.

There is nothing to apply for yet. Ofgem will consult on how the scheme works. The Treasury says the strategy will save a typical household "almost £30 by 2030". The Budget does not explain how that figure was reached, so it should be treated as a forecast, not a promised reduction.

If you are behind on energy bills now, your supplier must still offer an affordable repayment plan. Our guide to help for those in energy debt explains how to ask for one.

The Budget also says no new policy costs will be added to energy bills until a "Cost Control Framework" is in place, which it expects at the 2027 spending review.

Who pays for it

The energy measures are funded partly by a temporary rise in the Bank Corporation Tax Surcharge, the extra tax on bank profits. It goes from 3% to 6% between 1 January 2027 and 31 March 2028.

Home upgrades: more loans, less grant money

The Budget confirms the launch of the Warm Homes Loan Scheme, which DESNZ set out in a factsheet the day before. It offers government-backed loans for solar panels, batteries, heat pumps and other low-carbon systems, and is open to households across the UK.

The first thing to establish is that this is a loan, not a grant. It can spread the cost of work a household could not pay for upfront, but it has to be repaid. DESNZ says ten lenders are offering loans initially, at rates up to 5% lower than regular loans, and some are interest free. Maximum loans range from £10,000 to £35,000 depending on the technology. Our loan limits guide lists each one. Repayment terms can run to 30 years in some cases, which lowers monthly payments but can raise the total repaid. Lenders will carry out normal affordability and credit checks, and the work must be done by an MCS-certified installer.

At the same time, the Budget cuts £1 billion from the Warm Homes Plan's capital grant budget, which pays for upgrades rather than lending for them. The Treasury says the "majority" of funding for low-income households and social housing, delivered through mayors and councils, is protected. It does not say how much of the cut falls on other parts of the plan.

The Boiler Upgrade Scheme, which gives grants of up to £7,500 towards a heat pump in England and Wales, is held at £400 million in 2027–28 and then rises "broadly with inflation". Holding the cash amount steady is not the same as protecting what it buys. If installation costs rise in 2027–28, the same £400 million will fund fewer heat pumps. The Budget forecasts inflation peaking at 3.8% early in 2027.

Homeowners can use a Boiler Upgrade Scheme grant and a Warm Homes Loan together. Our guide to combining a loan with a heat pump grant explains how. Our home energy grants page shows every scheme still open.

Wages, benefits and pensions

The National Living Wage, for workers aged 21 and over, rises by 3.9% to £13.21 an hour from 1 April 2027. The rate for 18 to 20-year-olds rises to £11.27. The Treasury says this is worth about £910 a year to a full-time worker, but the Budget does not state the hours it assumed.

Carer's Allowance currently stops altogether if earnings go even a penny over the weekly limit. The Budget replaces that cut-off with a taper, so benefit would reduce gradually instead. The change is not due until 2030–31, after a new IT system is built, and the Treasury expects it to help about 48,000 carers in England and Wales. Our Carer's Allowance guide covers the current rules.

Also announced:

  • Universal Credit: the £2,500 surplus earnings threshold is extended for a year from 1 April 2027.
  • Pensioners: those whose total income is no more than the full new State Pension will not pay income tax on it, from 6 April 2027 until 5 April 2030.
  • Self-employed parents: eligible self-employed fathers, partners and adopters in Great Britain will be able to get parental pay from April 2029.

Savings and buying a home

The planned cut to the cash ISA allowance has been reversed. The limit stays at £20,000 from 6 April 2027.

Outside ISAs, tax on savings interest goes up. From 6 April 2027, the rates charged on savings income rise by 2 percentage points at the basic, higher and additional rates. The Treasury says 84% of income taxpayers are unaffected, and that a basic-rate taxpayer would need more than £25,000 in savings outside ISAs before paying any tax. That second figure depends on interest rates, so it will move as rates change.

For first-time buyers in England, a £4.7 billion "Your First Home" scheme will offer 20% equity loans, interest free for the first five years, with a minimum deposit of 2.5%. Household income caps are £110,000 outside London and £140,000 in London. Pre-registration opens by the end of December 2026, full applications in February 2027, and the first loans are due from April 2027.

From 29 October 2026, first-time buyers can use a Lifetime ISA towards a home costing more than £450,000, paying a reduced withdrawal charge of 20% instead of 25%. A separate First Time Buyer ISA, with a 25% government bonus on up to £4,000 a year, is due in April 2029.

Motoring and travel

The 5p cut in fuel duty, which was due to be reversed in January 2027, is extended to 1 July 2027. Single bus fares in England outside London will be capped at £2 for a year from 1 January 2027. From spring 2027, £100 million over two years will cut prices at local, lower-powered public chargers for electric cars. The Treasury estimates this will save drivers who cannot charge at home around £150 a year, without publishing the mileage behind the estimate.

The bigger picture

The Treasury's own forecasts set the scale. Real household disposable income per person is forecast to fall by 0.6% in 2026–27, and the Budget's household measures are expected to take 0.1 percentage points off inflation in 2027. A suspension of tariffs on more than 100 food products is expected to save consumers £120 million to £185 million a year in total.

What happens next

  • 29 October 2026: new Lifetime ISA rule for homes over £450,000 takes effect.
  • By the end of December 2026: pre-registration opens for Your First Home (England).
  • January 2027: £100 Household Energy Payments begin (England); £2 bus fare cap starts (England outside London).
  • 1 April 2027: National Living Wage rises to £13.21.
  • 6 April 2027: higher tax rates on savings income apply; cash ISA limit stays at £20,000.
  • July 2027: the electricity VAT cut and the fuel duty cut are due to end.
  • To be confirmed: dates for scrapping gas standing charges, details of electricity standing charge reform, and the design of the energy debt scheme, all subject to Ofgem.

If you live in England and pay council tax by direct debit, check your council tax bill to see which band you are in. If it is A to D, the payment should reach your bank account from January without you doing anything. Anyone who contacts you claiming otherwise, except your council, should be treated as a scam.

For other help with energy costs now, including the £150 Warm Home Discount, see our energy-bill support page.

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