Autumn Budget 2026: Key changes and what they mean for you

The Autumn 2026 budget has just been announced, with changes covering everything from energy bills and fuel duty to wages and work mileage. Some of the announcements could leave people better off. Other, including frozen Income Tax Thresholds, may mean you pay more tax as your earnings rise. Here’s a rundown of the changes most likely to affect you.

Quick answer: What changed in the 2026 Budget

The Budget keeps Income Tax on employment at its current rates but leaves key thresholds frozen. From April 2027, the National Living Wage will rise to £13.21, the trading allowance will increase to £3,000 and tax on savings and property income will rise. Mileage rates are also being made more generous, which could matter to employees and self-employed people who drive for work.

Are Income Tax Rates & thresholds changing?

No, Income Tax rates on employment earnings aren't increasing. However, the amount you can earn before paying tax is staying the same.

The Personal Allowance will remain at £12,570 until April 2031. This means you can earn up to £12,570 a year before paying Income Tax.

Although tax rates aren't going up, you could still end up paying more tax if your wages increase. This is because the tax-free allowance isn't rising with wages, meaning more of your income could become taxable.

The rules for people earning over £100,000 are also staying the same. If you earn above this amount, your Personal Allowance gradually reduces.

What about Scotland?

Scotland has its own Income Tax rates and bands, which will be confirmed in the Scottish Budget. However, the £12,570 Personal Allowance applies across the UK.

Are mileage allowance rates increasing?

Yes, there are changes to mileage allowance rates that could mean more tax relief for people who use their own car or van for work.

If you use your own vehicle for work-related journeys, the following rates apply:

• 55p per mile for your first 10,000 business miles each tax year. This rate became permanent from 6 April 2026.

• 35p per mile for any business miles over 10,000. This is increasing from 25p on 6 April 2027.

These are the rates HMRC allows for tax purposes, but your employer doesn't have to pay you the full amount.

Can I claim tax relief on my mileage?

If your employer pays you less than the HMRC-approved mileage rate, you may be able to claim tax relief on the difference.

For example, if you:

• Drive 6,000 business miles in your own car during the tax year.

• Receive 45p per mile from your employer.

• Are entitled to 55p per mile under HMRC's rules.

You could claim tax relief on the missing 10p per mile.

Here's how that works:

• 6,000 miles × 10p = £600

If you pay Income Tax at 20%, you could receive £120 in tax relief, provided you're eligible.

Remember, you won't receive the full £600 back. The tax relief is calculated based on the rate of Income Tax you pay.

What journeys qualify?

You can usually claim for business journeys, such as travelling to a temporary workplace or visiting clients. However, your normal journey between home and your regular workplace doesn't usually count.

What help is there with energy and fuel costs?

With energy bills and fuel prices continuing to put pressure on household budgets, the Government has announced several measures aimed at helping people manage their everyday costs.

One of the main announcements is a £100 household energy payment, which is expected to benefit up to 20 million households in England. If your home falls within council tax bands A to D, you could receive this payment from January 2027. The money will be paid through the council tax system, helping eligible households with their bills.

There is also some welcome news for electricity bills. The Government has extended the temporary 0% VAT rate on household electricity until 1 July 2027. It's estimated that this could reduce the annual energy price cap by around £50 from April 2027, offering households some additional savings.

Looking further ahead, changes could also be coming to gas bills. The Government has asked energy regulator Ofgem to remove standing charges for domestic gas by the end of 2027, or as soon as possible afterwards.

Standing charges are the daily fees you pay for being connected to the gas network, regardless of how much gas you use. Removing them could give households more control over their bills, particularly those that use less gas. However, suppliers would recover these costs through the price charged for gas usage, so households that use more gas could end up paying more.

What about petrol and diesel prices?

For drivers, the Government has confirmed that the existing 5p-per-litre cut in fuel duty will remain in place until 1 July 2027, alongside the wider freeze on fuel duty.

This means there won't be an increase in fuel duty before that date, offering some reassurance to drivers who rely on their cars for work or everyday journeys. However, any changes beyond July 2027 have yet to be confirmed.

What does the Budget mean for low-paid workers?

The National Living Wage will rise by 3.9% to £13.21 an hour from 1 April 2027. This means a full-time worker on The National Living Wage could see their gross annual earnings rise by around £910.

The National Minimum Wage will also rise to:

• £11.27 an hour for 18 to 20-year-olds

• £8.31 an hour for 16 to 17-year-olds

• £8.31 an hour for eligible apprentices

These figures are before Income Tax, National Insurance, pension contributions, student loan deductions and any effects on means-tested benefits.

What is changing for savings and property income?

If you earn interest on your savings or make money from renting out a property, you could face a higher Income Tax bill from April 2027. Income Tax rates on savings and property income will be four percentage points higher than their current levels. This includes a 2% increase in the 2025 Budget, plus a further 2% increase announced this year. 

From April 2027, the rates will be:

What does this mean for your savings?

The good news is that you can still earn some interest on your savings without paying tax.

If you’re a basic-rate taxpayer, you can earn up to £1,000 in savings interest tax-free each year.For higher-rate tax payers, this allowance is £500, while additional-rate taxpayers don’t receive a Personal Savings allowance.

Money saved in an ISA also remains tax-free and you’ll still be able to save up to £20,000 a year across your ISAs without paying Income Tax on interest.

What if you own a rental property?

Landlords could also see their tax bills increase from April 2027, as the new rates will apply to taxable rental profits.

However, it's important to remember that you don't necessarily pay tax on all the rent you receive. Tax is generally calculated on your rental profit after allowable deductions, rather than your total rental income.

This means the amount of additional tax you pay will depend on how much profit you make from your property and which tax band you fall into.

What's changing for side hustles and small traders?

If you earn a little extra money alongside your regular job, there's some good news in the Budget.

From 6 April 2027, the Government is increasing the tax-free trading allowance from £1,000 to £3,000 a year. This means you could earn up to £3,000 from certain side hustles or self-employed work without paying Income Tax on that income.

Whether you're freelancing, offering services in your spare time or running a small business, the increase could mean keeping more of what you earn.

The change also means that many people earning no more than £3,000 from qualifying trading activities will no longer need to complete a Self Assessment tax return just for that income.

However, there are still rules to follow. You'll need to keep records of what you earn, and depending on your circumstances, you may still need to complete a tax return.

What if you're already self-employed?

If you're self-employed, including working as a subcontractor under the Construction Industry Scheme (CIS), it's worth checking whether using the trading allowance is right for you.

You generally can't claim the trading allowance and deduct your actual business expenses from the same income. So, if your allowable expenses are higher than £3,000, you could be better off claiming those expenses instead.

For CIS subcontractors, the increased allowance also doesn't automatically remove your tax return or CIS reporting obligations.

The important thing is to compare your trading allowance with your business expenses to work out which option could save you the most tax.

What changes affect employment expense claims?

If you pay for work-related expenses out of your own pocket, changes announced in the Budget could make it easier to claim tax relief.

From 6 April 2028, the Government plans to remove the £2,500 threshold that currently determines whether employees need to claim employment expenses through Self Assessment.

What does this mean for you?

Currently, if you're claiming more than £2,500 in employment expenses, you generally need to complete a Self Assessment tax return.

Under the new rules, more employees will be able to claim tax relief through PAYE instead, without having to complete a tax return just for their work expenses.

However, you'll still need to provide evidence to support your claim, and HMRC has indicated that more checks will be carried out before tax relief is approved.

If you're planning to claim tax relief on work expenses, it's worth keeping records such as receipts, invoices and mileage logs, along with details of any expenses your employer has already reimbursed you for.

Remember, not every work-related expense qualifies for tax relief. You'll still need to meet HMRC's eligibility rules, and the changes don't automatically mean you'll be entitled to a refund.

Making Tax Digital (MTD) changes

If you're self-employed or a landlord, there's some good news if you're preparing for Making Tax Digital (MTD).

Making Tax Digital is HMRC's new way of managing Income Tax, which requires eligible taxpayers to keep digital records and send updates about their income and expenses every three months.

The Government has announced that people joining Making Tax Digital in April 2027 won't receive penalty points if they submit their quarterly updates late during their first tax year (2027/28).

This gives those joining the scheme a little more time to get used to the new system without worrying about penalties for late quarterly updates.

However, you'll still need to keep accurate digital records and submit all four quarterly updates before completing your annual tax return. Penalties for late tax returns and late tax payments can still apply.

The Government has also delayed the introduction of Making Tax Digital for certain groups of taxpayers until further notice.

If you're self-employed or receive rental income, it's worth checking when the new rules will apply to you so you have plenty of time to prepare.

More support for pensioners

There's some good news for pensioners in the Budget, with changes designed to prevent people from paying Income Tax simply because their State Pension has increased.

From April 2027, the Government is introducing a new Pension Tax Allowance, which will help protect pensioners whose income is slightly above the standard tax-free Personal Allowance of £12,570.

For the 2027/28 tax year, pensioners with a total annual income of up to £13,037 will qualify for the full allowance, meaning they won't have to pay Income Tax simply because their income has risen above the standard tax-free threshold.

Those earning slightly more may also benefit, although the allowance will gradually reduce as their income increases. The allowance will be applied automatically, so eligible pensioners won't need to make a claim.

Will the State Pension continue to increase?

The Government has also confirmed changes to the State Pension triple lock, which helps determine how much pensions increase each year.

The existing triple lock will remain in place until April 2030, meaning the State Pension will continue to rise each year by whichever is highest: inflation, average earnings growth or 2.5%.

From April 2030, the way increases are calculated will change. The State Pension will still rise each year, with protection against inflation and a minimum increase of 2.5%, but the new approach is designed to keep pensions broadly in line with earnings over time.

So, what does this mean for the average UK tax payer?

Whether you're better or worse off following the Budget will largely depend on your personal circumstances, including how much you earn, where you work and whether you're eligible for any of the new support measures.

For some people, there's good news. If you use your own car for work, the changes to mileage allowance rates could mean more tax relief on your travel expenses. Those earning the National Living Wage will also benefit from an increase in their hourly pay, while eligible households could receive additional help with energy bills.

People earning a little extra money through a side hustle or self-employment could also benefit from the increased trading allowance, while some pensioners will receive additional protection against Income Tax.

However, not everyone will be better off. Although Income Tax rates aren't increasing, the continued freeze on tax-free allowances means that as wages rise, more of your earnings could be subject to tax. People with taxable savings interest or rental income could also face higher tax bills, while those repaying Plan 2 student loans may find themselves making repayments on more of their income as their earnings increase.

Ultimately, while the Budget offers some financial relief, the overall impact will vary from person to person.

The important thing is understanding what you're entitled to. Whether that's claiming tax relief on work expenses, checking your mileage allowance or making sure you're not paying more tax than necessary, it's worth reviewing your circumstances to see if you could be owed money.

5 common mistakes to avoid

With so many changes announced, it's easy to misunderstand what they mean for your finances. Here are a few things worth keeping in mind:

How RIFT can help

With so many tax changes announced in the Budget, it isn't always easy to know what they mean for you or whether you could be entitled to a tax refund.

That's where RIFT Refunds comes in.

If you've paid for work-related expenses out of your own pocket, such as travel, mileage, tools or uniforms, you could be entitled to claim tax relief.

At RIFT, we help you understand what you could claim for, gather the information needed and handle the process with HMRC on your behalf.

Whether you work in Construction, the Armed Forces or Security, our team is here to help make claiming your tax refund as straightforward as possible.