A surprise rise on property and savings income

The surprise of Budget 2026 came on unearned income: John Healey, delivering his first Budget on 28 October 2026, put tax rates on earnings from property or savings up by 2p. The move sits inside a broader set of increases aimed at banks and landlords, whose proceeds pay for a £100 winter handout reaching 20 million families.

Measures for households in the Budget include:

• •a £100 cost-of-living payment for all English households in council tax bands A-D, with a total cost of £2.6bn once funding for the Scottish and Welsh governments is included
• •the cancellation of fuel tax rises planned by Rachel Reeves, plus an extension of the VAT cut on electricity prices to next summer
• •a rates relief threshold for retail, hospitality and leisure firms lifted from £12,000 to £18,000, paid for through higher taxes on gambling and vape shops

Rents and savings squeezed, forecasters warn

The Office for Budget Responsibility warned that the higher tax could shrink the rental market, as landlords leave the sector, and that this in turn risks "leading to a steady rise in rents".

From the savings industry, AJ Bell's director of personal finance, Laura Suter, framed the change as the latest in a series of blows to people who hold money on deposit: "Savers will be hit with another hefty tax rise on their savings interest." She added that landlords facing the higher rate might instead raise rents or leave the market altogether.

Think-tank responses to the wider package divided. Ruth Curtice, who leads the Resolution Foundation, said: "The chancellor has missed the mark with badly targeted support that has left families facing a tough winter as energy bills rise." Hannah Peaker, deputy chief executive of the New Economics Foundation, said: "As households prepare to be hit by a wave of price rises this winter, the chancellor has shown the right instincts but not yet the right scale."

EDF expects the Ofgem price cap, which sets consumer bills, to climb by £466 in January. The OBR's David Miles pointed to a "pretty grim picture" for household finances as inflation moves towards almost 4%.

What the tax rise pays for

Revenue from the property and savings increase and the bank levy pays for the cost of living package, which Healey said would "take the pressure off in the coldest months, and see people through to the spring". The £100 payment covers 20 million families. "I know that people look to government at times like this, not to solve all their problems, but to give them a bit of breathing space", Healey told the Commons.

He attributed the fiscal outlook to "global economic storms", saying inflation and interest rates would add £14bn to the government's interest bill this year, while committing to Labour's fiscal rules.

Banks shrug off higher levy

The levy banks pay on their profits doubles to 6% for 15 months to help fund the household measures. Investors took the news calmly: on Wednesday, bank shares ranked among the biggest gainers in the blue chip FTSE 100 index, because the increase fell short of what parts of the industry had expected.

Healey will turn to welfare next month, once reports from Alan Milburn on youth unemployment and Sir Stephen Timms on disability benefits are published.