UK Chancellor John Healey unveils budget with £100 energy payment and bank tax hike

Chancellor John Healey presented his first budget on Wednesday, outlining a package of measures aimed at easing household energy costs and supporting small businesses. A new £100 "Household Energy Payment" will be paid directly to about 20 million households in council tax bands A-D, costing £2.6 billion, while the VAT cut on electricity is extended to July, reducing the annual price cap by £50. The Treasury also announced that standing charges on gas bills will be removed from next year, potentially saving around £45 per year for many households.

Fuel duty will remain at the reduced rate until July 2027, and the higher mileage allowance for work-related travel is increased from 25p to 35p per mile, with the standard mileage rate made permanent. Defence spending will be supported by a new innovative finance taskforce and an additional £10 billion in aid for Ukraine, plus £0.5 billion in urgent military funding for the winter.

To fund energy support, the bank surcharge will be temporarily doubled to 6% for 15 months, adding a 3% surcharge on top of the 25% corporation tax rate. > "I want to say directly to our banks, I celebrate and am grateful for the role you play. And amid global economic storms, I am looking to our banks to help fund breathing space for British families," Healey told MPs.

Small-business rates relief thresholds are raised from £12,000 to £18,000, removing rates for about 70,000 additional retail, hospitality and leisure firms and freezing rates for others in real terms for two years. The tax-free cash ISA limit remains at £20,000, and a new "Starter ISA" will be introduced for first-time investors.

Tax changes include raising the duty on gambling machines from 20% to 25%, removing business rates relief for vape shops and adult gaming centres, and strengthening VAT enforcement for online marketplaces. A £10 million alcohol duty relief will assist around 2,000 smaller brewers and cider makers.

Additional initiatives cover a British data-centre covenant with community investment criteria, devolution of business-rates and income-tax revenue to regional mayors from 2028, and a £1.5 billion loan fund for local infrastructure projects. Families will see a £15 million grant for children's book programmes and a new eligibility rule for paid parental leave for self-employed fathers and partners.

Industry reactions were mixed. Shevaun Haviland of the British Chambers of Commerce noted the budget addressed business cost pressures but was limited by fiscal constraints. Julian Hartley of the Joseph Rowntree Foundation said the focus on cost-of-living issues was appropriate but called for greater support, while Clare Moriarty of Citizens Advice warned that significant gaps in assistance remain.