Your pay, energy bills and savings: How the Budget affects you

Image source, Getty Images By Kevin Peachey Cost of living correspondent Published 28 October 2026, 13:45 GMT Updated 41 minutes ago Families facing cost-of-living pressures are being offered some help, or "breathing space" as Chancellor John Healey is calling it.

The help comes as prices are rising faster than expected with annual energy bills in particular likely to increase by hundreds of pounds in January.

Here's how the key announcements in the Budget affect you and your money.

If you are living in a home in council tax bands A to D in England, you will receive a one-off £100 "Household Energy Payment" from January, funded by extra tax on banks.

You can find your council tax band by looking on your annual bill, or by looking on the government's website , external - although that was struggling to cope with traffic after the announcement.

Administrations in Scotland, Wales and Northern Ireland will receive the equivalent funding, and they will decide whether to introduce the same payment.

This is designed to help with soaring energy bills, with some forecasts suggesting a typical annual bill could rise by £400 or so to £2,100 in January the saving will be only a quarter of that. Although it's designated for energy bills, you can spend the money on anything you wish.

The VAT cut on electricity bills, which was introduced in October, will also be extended to July. It was due to end in April.

Healey announces £100 energy payment for millions and bank tax rise in first Budget

The fee for connecting to your gas supply so called standing charges will be scrapped in England, Scotland and Wales, next year "or as soon as possible after", the chancellor said.

These fixed daily charges will then be shifted onto the price you pay for each unit of energy.

The Treasury calculates that 60% of households will save an average of £45 a year, with lower users gaining the most. But the saving will come after the projected big rise in bills in January.

Higher users - in the biggest houses but also large, low-income families - will pay more than they currently do.

The government wants to extend reforms to electricity standing charges later.

The 5p "temporary" cut in fuel duty on petrol and diesel, introduced by Rishi Sunak in 2022, will be extended to July. It was scheduled to be phased out from January.

It means drivers will still pay the levy at 52.95p per litre.

Motor fuel prices have risen sharply owing to the continued impact of the Iran war on drivers, with diesel having recently hit new records when it moved above £2 per litre.