UK Households Set to Receive £100 Winter Payment as Bank Levies Double

Households across England will receive a one-time payment of £100 this winter. The measure aims to help cover rising energy costs during the colder months.

Chancellor John Healey announced the policy during his first budget speech on Wednesday. The total cost of the scheme is estimated at £2.6 billion. This figure includes funds allocated to the Scottish and Welsh governments. Healey indicated that those administrations would likely implement similar local schemes.

The payment targets all English households in council tax bands A through D. Approximately 20 million homes are expected to qualify for the direct deposit. Healey described the initiative as a way to help residents reach spring with less financial strain.

To finance the handout, the government will raise the levy on bank profits. The tax rate will double to 6% for a period of 15 months. Healey also increased tax rates on income from property and savings by 2 pence. This latter change was not widely anticipated by market analysts.

Bank shares reacted positively to the news. Stocks in the FTSE 100 index saw gains as investors noted the levy increase was smaller than some industry fears. The chancellor also scrapped fuel tax hikes planned by his predecessor, Rachel Reeves. He extended a previous VAT reduction on electricity until next summer.

Businesses in retail, hospitality, and leisure sectors will see a higher rates relief threshold. The limit will rise from £12,000 to £18,000. This change is funded by higher taxes on gambling and vape shop operators.

The Office for Budget Responsibility issued a cautious outlook alongside the budget. Chief economist David Miles called the economic picture grim. Inflation is projected to rise to nearly 4%. Economic growth for the coming year is expected to be 1%, lower than previous forecasts. Real disposable incomes are projected to be only 2% above pre-pandemic levels by 2030-31.

Critics argued the tax changes could have unintended consequences. The OBR warned that higher taxes on landlords might reduce housing supply and drive up rents. Laura Suter of AJ Bell stated that savers face another substantial tax increase. Meanwhile, Ofgem predicts the energy price cap will rise by £466 in January. The government projects it will still meet its main fiscal rules, maintaining a buffer of £15 billion by 2029-30.