What cost of living support did the government announce in the Budget?
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A raft of cost of living measures promising ‘more breathing space’ for struggling households contending with rising food prices and energy bills have been announced.
Savings on household electricity bills and supermarket items were announced ahead of the Budget.
Today, the big news is a one-off £100 energy payment for millions of households, gas standing charges being axed and freezes to both fuel duty and NHS prescription charges.
- Find out more: Autumn Budget 2026 key points
£100 energy payment
English households in council tax bands A to D will receive £100 'to take pressure off in the coldest months and see people through to spring', Chancellor John Healey has announced.
This 'household energy payment' will be paid directly into bank accounts from January 2027, so you don't need to do anything to receive it. The £2.6bn scheme is expected to help around 20 million households.
We expect scammers will jump on this, so keep an eye out for fraudsters asking you to click links or share bank details to claim the payment.
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Governments in Scotland, Wales and Northern Ireland will receive their share of the funding and have been urged to follow suit.
Gas standing charges scrapped in 2027
Standing charges – the fixed daily fee added to your gas bill, regardless of usage – will be removed by the end of 2027 or 'as soon as possible after'.
These fixed costs will instead be paid on the unit rate (the price per kilowatt-hour of gas used).
The Treasury said this could save 60% of billpayers an average of £45 a year. The other 40% could see higher bills.
Estimates by the research foundation Nesta suggest that 84% of the poorest households would be better off, compared to only 23% of the wealthiest.
Some households (higher energy users or larger homes consuming roughly above 12,000 kWh of gas per year) will be worse off as a result of this change. The government has promised to set out targeted support.
Further details on electricity standing charge reform will be announced next year.
Electricity bills VAT cut extended
The removal of VAT from household electricity bills in Great Britain, which started on 1 October 2026, was originally due to end next March but will now be extended until July 2027.
The rate has dropped from 5% to 0%, which is expected to knock £50 a year off the energy price cap from April 2027. VAT on gas is not changing and remains at 5%.
You don't need to do anything to claim this discount, as energy suppliers are expected to pass on the VAT reduction to all their electricity customers. This applies automatically in England, Scotland, and Wales (including standard variable, fixed-rate, and prepayment meters).
Northern Ireland, where EU VAT rates apply on electricity and other goods under the terms of Brexit, will receive comparable funding to enable it to support households with the cost of living.
- Find out more: How to get the best energy deal
Savings on travel: fuel duty, bus fares and rail tickets
Fuel duty hike cancelled
A planned increase in fuel duty has been cancelled, and the temporary 5p fuel duty cut has been extended until at least July 2027.
Drivers were expected to pay nearly 56p a litre from 1 January (delayed from September 2026), but the 15-year fuel duty freeze, currently 52.95p per litre, will remain in place.
Rail fares freeze not extended
The freeze on regulated rail fares in England will not be extended, meaning train travellers should prepare for higher ticket prices from April 2027.
Rail fares were frozen for the first time in 30 years in 2026, including season tickets, most peak commuter returns and off‑peak returns between major cities.
£2 bus fares from in 2027
Single bus fares in England (outside of London) will be capped at £2 for the whole of 2027. This replaces the existing £3 cap in place throughout 2026.
In Greater Manchester, where Prime Minister Andy Burnham was mayor for nine years until becoming an MP in June this year, single bus fares have been capped at £2 since 2022.
Londoners continue to benefit from a separate bus ‘hopper fare’ system with a £1.75 cap (£1.85 from 1 November 2026) on unlimited bus and tram journeys within one hour.
Half-price rail travel extended to 18-year-olds
From 17 August 2027, changes to the terms of a 16-17 Saver Railcard mean young travellers will benefit from 50% off most train fares well past their 18th birthdays.
Railcards will be valid for a full year from the purchase date, so 17-year-olds can buy one up to the day before they turn 18, locking in savings until they turn 19.
This offers better value than a standard 16-25 Railcard, which only reduces fares by one third.
- Find out more: 11 ways to plan cheap days out in the UK
Frozen NHS prescription charges
The cost of a single NHS prescription will remain frozen at £9.90 until at least April 2028.
Costs increased from £8.80 in 2018 to £9.65 in 2023 before being frozen at £9.90 in 2024.
These charges only apply in England, as prescriptions are free for everyone in Scotland, Wales and Northern Ireland.
- Find out more: How to save on prescription fees
5 more ‘everyday fixes’
The latest in a series of ‘everyday fixes’ designed to ‘save families time and money’ were also unveiled ahead of the Budget, following on from a range of support including help with childcare, uniform costs and school meals, and a ban on subscription traps.
- Tax-free fuel if you drive to work The government is permanently setting the tax-free mileage rate at 55p per mile for the first 10,000 miles you drive for work, and increasing the rate after that from 25p to 35p. This sets how much employers can pay back to staff tax-free, or how much self-employed workers and employees can claim in tax relief, when using their own car for business travel. The government said this will help around three million workers such as nurses, care workers and tradespeople, saving drivers roughly £120 to £300 a year.
- Expanded parental pay The government is extending parental pay to more than 150,000 additional parents each year, including self-employed fathers, who were previously left out. Eligible parents will get two weeks of support worth up to £194 a week to help them take time off with their new child.
- Carer’s Allowance cliff-edge abolished The Carer’s Allowance 'cliff-edge' is being replaced with a gradual taper system so earning slightly more no longer cuts off all support. Currently, unpaid carers lose their entire benefit if they earn even 1p over the net weekly earnings limit of £204. This limit applies to income after deducting tax, National Insurance, and other expenses such as pension contributions. Under the new rules, carers will instead lose £1 of support for every £1 earned above the threshold.
- Tariffs removed on household goods The government is scrapping import tariffs on more than 100 goods, including household favourites like baked beans, chocolate and gherkins, as well as fertiliser for farmers and kerosene heating oil. Combined with earlier cuts on staples like pasta, tuna and fruit juice, the Treasury estimates the measures could save families up to £21 a year on groceries, assuming businesses pass on the savings to shoppers.
- More Post Office drop boxes 500 Post Office branches will gain parcel drop boxes before the end of this year, with another 500 set to follow before April 2027, allowing shoppers to 'send and return parcels without having to queue at a Post Office counter'. The Prime Minister also promised that 600 branches will 'benefit from upgrades' before April 2027.
