Table of contents

The government has shared some new changes in the Budget today. This simple guide explains what they mean so you can plan ahead.

Wages, benefits, savings and pensions

  • Wages are going up. From April, the legal minimum wage for over-21s to rise 4.1% in April, from £12.21 to £12.71 per hour.
  • The wage for 18–20-year-olds is to go up 8.5%, from £10 to £10.85 per hour.
  • If you’re under 65, you’ll save less tax-free in an ISA (Individual Savings Account), as the limit is going down from £20,000 to £12,000.
  • State Pensions are rising:
    • New State Pension: Increasing from £230.25 to £241.30 a week
    • Basic (Old) State Pension: Increasing from £176.45 to £184.90 a week
  • The Universal Credit Standard Allowance for a single person aged 25 or over will increase by around £295 a year (around £465 a year for couples).
  • The Help to Save scheme, which offers people on Universal Credit a bonus on savings, has been extended and expanded beyond 2027.
  • Student loan repayment rates will stay the same.

Money and everyday costs

Energy

  • Energy bills are expected to reduce by £150 on average next year through cuts to levies. Some lower income households could save up to £300.

Prescriptions

  • Prescription costs are staying under £10.

Transport

  • Regulated rail fares in England will be frozen from March 2026 for a limited time.
  • Bus fares will stay capped.
  • Premium cars to be excluded from the Motability scheme, which allows people on certain disability benefits to lease vehicles more cheaply.
  • Fuel duty is frozen until September 2026.
  • Funding will be extended for the electric car grant.
  • New pay-per-mile charges for electric and hybrid vehicles will be introduced in 2028. The below will be paid in addition to vehicle tax:
    • 3p per mile for electric cars.
    • 5p per mile for hybrids.

Council tax

  • Council tax bands will be reviewed in 2028, which may change how some households are charged.
  • From 2028, people with very high-value homes (£2m+) will pay extra council tax.

Taxes

  • Income tax and personal tax thresholds will stay the same for three more years.
  • There will be no increases to National Insurance or VAT.
  • Tobacco and alcohol taxes will rise in line with inflation.
  • Salary sacrifice pension rules are changing – only the first £2,000 will be tax-free.
  • Some sugary milk drinks will now have extra tax added.

Business

  • Tax on property, dividends and savings will go up by 2%.
  • Young people under 25 can get fully funded apprenticeships in small and medium enterprises (SMEs).

If you’re worried about how any of these changes may affect you, get debt help online or call us on 0800 316 1833 for a confidential conversation.