Publication type
CeMPA Working Paper Series
Series Number
CEMPA13/26
Series
CeMPA Working Paper Series
Authors
Publication date
November 12, 2026
Abstract:
This note presents estimates of the fiscal and distributional impact of six measures an nounced in the UK Government’s 2026 Budget, with a horizon extending to the fiscal year 2029/30. The analysis is conducted using UKMOD, the tax-benefit microsimulation model developed by the Centre for Economic Microsimulation and Policy Analysis (CeMPA) which captures the immediate (“morning after”) effects of the Budget reforms. We compare our results to the HM Treasury’s official costings and two independent anal yses from PolicyEngine and the Resolution Foundation. Key findings: Cost-of-living measures are worth most relative to income for low-income house holds. The VAT cut is the most progressive, and fuel duty the least. The energy payment reaches most households. Those at the bottom of the distri bution gain more than 1% of their income. The Pension Tax Allowance gives small gains concentrated among single pension ers (3.8%) and the poor. Property and savings tax rises fall mainly on the top deciles, however, loses only cross 1% of income. The Parental Allowance reaches few households (0.6%), mostly in the middle-up per deciles. Combined effects show progressive support in 2026/27, reducing poverty after housing costs (AHC) by 0.2 percentage points (around 150,000 individuals). From 2027/28, it results in small losses (under 0.1% of income) among the top deciles.
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