On 27 October 2026, Chancellor John Healey presented his first budget, acknowledging the UK’s current “difficult moment” amidst global economic uncertainty. This budget comes as a response to rising cost of living pressures affecting households across the country. Faced with limited fiscal room due to international market turmoil and the ongoing conflict in Iran, Healey’s budget aims to provide temporary relief rather than sweeping long-term changes.
The budget is expected to be modest, with major decisions on tax and spending deferred until next year. Healey highlighted the impact of rising energy prices and living costs, stating that the budget would focus on responsibly easing these pressures while adhering to Labour’s fiscal rules. His approach is to instil “fresh hope for the future” by promising reforms to make the UK more resilient to global economic shocks.
Temporary support and reforms announced
Chancellor Healey’s budget includes temporary support for poorer families ahead of an expected rise in energy bills in January. Additionally, he has pledged to reform the energy market to lower costs for all households in the long run. A significant change is the proposed abolition of the gas standing charge, which would reduce bills for consumers using less energy. However, this comes at the cost of reduced investments in hydrogen and carbon capture, impacting the UK’s net zero targets.
Other measures include ending the carers’ allowance cliff edge, scrapping the planned fuel duty increase in January, and increasing the minimum wage by nearly 4%, although the rise for younger people under 21 is slowed. Healey also plans to increase defence spending and devolve more tax revenues to local leaders. The budget also addresses inflation, which reached a high of 3.5% last month, contributing to the Bank of England’s expected interest rate hikes.
What this means for newcomers
For newcomers to the UK, the budget’s focus on easing the cost of living may offer some short-term relief. With the emphasis on reducing energy and living costs, you might see some reduction in your household expenses. However, the budget’s temporary nature means that these changes may not provide long-term stability, so it’s key to plan your finances carefully.
Given the ongoing economic uncertainties, it’s essential to understand how the budget may impact your personal finances. The UK’s cost of living varies significantly by region, so budgeting for your specific area is key. For detailed guidance on managing your finances in the UK, including opening a bank account and understanding your tax obligations, consult the UK Money Guide for Newcomers.
What you should do
- Open a bank account: Ensure you have a UK bank account to manage your finances effectively. App-based banks like Monzo and Starling can help you open an account even without a traditional address, which is often more challenging for newcomers.
- Apply for a National Insurance number: If you plan to work in the UK, apply for your National Insurance number as soon as possible. Although you can start working before it arrives, having it ensures your tax records are accurate.
- Check your tax code: Verify your tax code on your payslip to ensure you’re not overcharged. Newcomers might be placed on an emergency tax code initially, but this should be corrected once HMRC updates your details.
Frequently asked questions
Will the budget affect my energy bills?
The budget includes measures to reduce energy bills, such as the proposed abolition of the gas standing charge, which could lower costs for those using less energy.
Can I start working before receiving my National Insurance number?
Yes, you can begin working and receive payment before your National Insurance number is issued, as long as you can prove your right to work in the UK.
Why might my first UK payslip show high taxes?
New arrivals often receive an emergency tax code initially, leading to higher tax deductions. This should be corrected once HMRC receives your full details, and any overpaid tax is usually refunded.
How can I open a bank account without a UK address?
App-based banks like Monzo, Starling, and Wise allow you to open an account without a UK address, making them suitable options for newcomers who might not have traditional address documents yet.
Source: Guardian UK: read the original
