4 days ago
22
Single
Low income
Luke can’t get a graduate role and works 35 hours a week in a cafe. He is paid the national living wage (NLW) of £12.21 for workers aged 21 and over. He pays £1,930 in income tax and £772 in national insurance (NI) contributions. This results in a monthly take-home pay of £1,627 after tax, or £19,520 a year. On 1 April 2026 the NLW rate will increase 50p – 4.1% – to £12.71 an hour. His annual income tax bill will rise to £2,112 and NI to £845, leaving him with £1,681 a month, an increase of £54.
Single
Average earner
Amir is earning the UK’s typical (median) wage of £38,000 in his marketing job. He pays £5,086 a year in income tax and NI of £2,034. His monthly take-home pay is £2,573, or £30,880 a year. With no changes to “big three” – income tax, national insurance and VAT – not a lot will be different in 2026. Traditionally income tax bands keep pace with inflation, but they will remain frozen until 2031. This means a greater proportion of pay is taxed than would otherwise be expected. He will benefit from the average £150 cut to energy bills promised and one-year freeze on regulated rail fares.
Couple, two children
Both working, one high earner
Tash is a management consultant earning £63,000, while Mo earns £28,000 as a part-time teacher. Tash pays £3,000 a year into her pension using her company’s salary sacrifice scheme, which enables her to retain her child benefit entitlement and save on NI. After tax they have a combined monthly income of £5,941. However, from 2029 there will be a cap of £2,000 on pension contributions through salary sacrifice schemes and, at current NI rates, paying in £3,000 will cost her an extra £20.
Couple, two children
Both working, the higher earner is a small business owner
Jim owns a building company and pays himself by drawing a salary up to the NI threshold of £12,570 and taking £85,000 in dividends on top. Lily earns £25,000 as an office administrator. Their combined annual income tax and NI bill is £24,950, leaving £8,135 a month to live on. However, the increased rates of dividend income tax from 2026 mean their annual bill will increase by £1,690. This leaves them £7,994 a month.
Single parent
Sole income
Jessica earns £50,000 as an accounts manager. She receives £26.05 a week child benefit for her son, totalling £1,355 a year. Her annual income tax bill is £7,486 and £2,994 for NI, leaving her with monthly take-home pay of £3,406. The frozen thresholds mean any pay rise will lead to her becoming a higher-rate taxpayer (the 40% rate kicks in at £50,271). Her child benefit payments will increase and she will also bank the promised energy bill savings.
Low income family
One income plus universal credit
The Smith family have three children and live in a rented flat in the Midlands. Jack works 35 hours a week in a distribution centre and is paid the NLW. His partner Mia isn’t working. After tax and NI his take-home pay is £1,627 a month. This is topped up with a monthly universal credit and child benefit payment totalling £1,457.
Under the two-child cap parents could only claim universal credit or tax credits for their first two children. The decision to abolish this rule , and the uprating of benefits, mean the family should be able to claim £304 a month for their third child. They will also benefit from the 2026 uplift in the NLW.
Senior manager
One income, approaching retirement
Jane is keen to retire and, with her mortgage paid off, has been using her company’s salary sacrifice scheme to pay £20,000 a year into her pension pot. Saving for her retirement this way results in a combined annual income tax and NI bill of £25,143, which leaves this higher-rate taxpayer £6,655 a month to live on. She is affected by the new cap on salary sacrifice contributions from April 2029. If she continues to save this way the new restrictions will mean paying an extra £360 in NI each year.
Couple
Two incomes, saving to buy a house
With one partner earning £55,000 and the other on £51,360, the freeze on tax thresholds means that although their take home-pay is not affected by the budget in real terms, their purchasing power is falling. These renters are saving up to buy their first home and both have been putting their spare cash into cash Isas. However, as part of a drive to get people to invest in the stock market the amount that can be saved in a cash Isa is being reduced from £20,000 to £12,000 a year for under-65s in April 2027. The couple are worried their rent might go up if their landlord looks to pass on higher income tax on rental income when the rates increase in 2027.
Low income pensioner
New state pensioner
George’s basic state pension is worth £241 a week, £963 a month or £11,550 a year. He qualifies for £200 winter fuel payment. Next year, under the “triple lock” policy, the basic and new state pension payments will go up by 4.8% to £184.92 and £241.30 a week respectively. However, Age UK warns the decision to freeze the income tax personal allowance for another three years will drag more older people into paying income tax, including some on low and modest incomes (the government has pledged to ease the administrative burden for pensioners whose sole income is the state pension).
Affluent pensioners
Retired couple with private pensions
Brian and Joan receive the new state pensions alongside their respective retirement pots, resulting in a combined income of £60,000. Their annual income tax bill is £6,972, leaving them with £4,419 a month to spend. From April 2026 they will receive the state pension increase worth £1,150 a year to the couple, adding £230 to their income tax bill. The pair own a £2m home in a leafy London suburb so face paying the new “mansion tax” – AKA the high value council tax surcharge – of £2,500 from 2028.
Driver
Electric car owner
The chancellor announced a new tax for electric and hybrid car drivers. From April 2028, electric car drivers will pay a road charge of 3p a mile, while plug-in hybrid drivers will pay 1.5p a mile, with the rates going up each year with inflation. The tax is expected to add up to about £255 a year for the average EV driver, according to the online platform Carwow. Meanwhile, the decision to keep the 5p fuel duty cut in place until September 2026 results in a saving of more than £3 a tank for drivers of petrol and diesel cars.
