The planned allowance would cover pensioners whose total income is no higher than the full new State Pension. Healey also announced energy-bill measures and more than £600 million for superintelligence (SI) projects.
UK Chancellor John Healey announced a Pension Tax Allowance intended to keep pensioners whose total income is no greater than the full new State Pension free of income tax until at least 2030.
The government had already committed not to tax people whose only income comes from the State Pension. The announced allowance sets the protection by total income, rather than requiring all that income to come from the State Pension.
Income-tax thresholds remain frozen. When income rises while thresholds stay fixed, a larger share can become taxable or fall into a higher tax band.
The October 2026 Budget, the first since Andy Burnham became prime minister, also includes energy-bill changes and more than £600 million for superintelligence (SI) projects, the BBC said.
The income ceiling covers pensioners' total income, not just their State Pension payments. Pensioners with income above the full new State Pension are outside the stated tax-free guarantee. The announcement did not specify when the allowance would begin.
State Pension payments will rise by 3.9%, matching average wage growth. The increase follows the triple lock: the rule that raises the basic and new State Pension by the highest of earnings growth, price inflation or 2.5%.
The announced full rates are shown below. The new State Pension applies to people who reached State Pension age from 6 April 2016; those who reached it earlier remain on the older scheme.
The government plans a 26 November start for suspensions covering 101 food and agricultural products, including garlic, gherkins and plant-based milk.
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| Pension | Weekly | Annual |
|---|
| Full new State Pension | £250.70 | £13,036.40 |
| Full old basic State Pension | £192.10 | £9,989.20 |
The Budget allocates more than £600 million to SI-related projects. That package includes additional money for the UK’s AI Security Institute and funding for a national AI Biosecurity Lab.
| Recipient | Announced funding |
|---|---|
| AI Security Institute | An extra £120 million |
| National AI Biosecurity Lab | £100 million |
The gas reform would remove standing charges: fixed daily fees paid regardless of how much gas a household uses. Those charges average £108 a year for a typical household. The costs would move into the price charged for each unit of gas, rather than disappear.
The Treasury estimates that 60% of gas account-holding households could save an average £45 annually. Its model uses household spending data adjusted to October–December 2026 gas rates and assumes no change in how much gas people use. The £45 is therefore an estimated average for those households, not a guaranteed saving.
Lower gas users would gain most, while higher users—including large, low-income families as well as people in the biggest houses—would pay more under the new charging structure, the BBC said. The government says it will set out targeted support for a small number of households.
Separate help is scheduled sooner. From January 2027, 20 million households in England whose homes fall in council tax bands A–D are due to receive a one-off £100 Household Energy Payment, paid directly into bank accounts and funded by extra tax on banks. Scotland, Wales and Northern Ireland will receive equivalent funding, but their administrations will decide whether to introduce the same payment.
The cut in value added tax (VAT) on electricity bills, introduced in October 2026, will also be extended to July 2027 instead of ending in April.
Healey said gas standing charges would be removed in England, Scotland and Wales in 2027 “or as soon as possible after”. The government plans to ask Ofgem to deliver that change, shifting the fixed costs onto unit rates.
The Budget preserves the £20,000 annual cash ISA allowance and proposes a 24% rate on savings and rental income for basic-rate taxpayers from April 2027.
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Under the announced Your First Home terms, eligible first-time buyers purchasing qualifying new-build homes in England can seek a 20% equity loan with a deposit from 2.5%. Applications are scheduled to open in February 2027.
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