By Basant El-Faramawy
Money expert Martin Lewis has delivered his verdict on the first Autumn Budget under Prime Minister Andy Burnham, with Chancellor John Healey outlining measures aimed at giving families "breathing space" on living costs while adhering to Labour's fiscal rules.
Energy Support and Tax Measures
The Budget includes a £100 energy bill support payment for around 20 million households this winter, alongside the scrapping of the gas standing charge to benefit lower-income households. Tax breaks for high street firms were also announced. The Office for Budget Responsibility slashed its GDP growth forecast for next year, and Healey said the UK is spending £14 billion more on debt interest this year due to soaring borrowing costs.
Income Tax Freeze Continues
Lewis highlighted that income tax thresholds remain frozen, meaning "fiscal drag" will persist. The tax-free personal allowance has been fixed at £12,570 since 2022, pulling more earners into higher brackets as wages rise. The previous chancellor, Rachel Reeves, extended the freeze to 2031, and Healey did not alter that timeline.
Student Loan Threshold Unchanged
The repayment threshold for Plan 2 student loans stays frozen at £29,385 until 2030. Lewis described this as "double fiscal drag" for graduates, who face both frozen tax bands and a static loan threshold, causing a larger share of pay rises to be subject to the 9% repayment rate.
Lifetime ISA Penalty Reduced
Lewis said he was "delighted" that the penalty for withdrawing money from a Lifetime ISA (LISA) for non-property purchases will drop from 25% to 20%. The government-backed scheme tops up first-time buyers' deposits by 25%, up to £1,000 per year. The change removes the effective 6.25% penalty on savers' own contributions. A new ISA for first-time buyers will eventually replace the LISA, though implementation will take several years.
