How Rachel Reeves’s measures on tax, NI and benefits affect single people, couples, families and those receiving pensions in England, Wales and Northern Ireland
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.
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 £2,466, or £29,588 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.
