Budget 2026: what it means for care providers

The headlines for care providers

The headlines for care providers
Measure	What the Budget says	Starts	Applies to
National Living Wage	Up 3.9% to £13.21 an hour (21 and over)	1 April 2027	UK
Other minimum wage rates	18–20: £11.27; 16–17 and apprentices: £8.31; accommodation offset £11.53 a day	1 April 2027	UK
National Insurance	"No increase to the headline rates of income tax, National Insurance contributions or VAT"	—	UK
Mileage for staff who drive	55p a mile for the first 10,000 business miles made permanent; 35p (up from 25p) above 10,000	35p rate from 6 April 2027	UK
Immigration Skills Charge and CoS fees	When an employer pays them, they won't be treated as a taxable benefit in kind	Payments on or after 28 October 2026	UK
Adult social care funding	No new money announced. National Care Service in England to be funded by adjusting the Triple Lock from April 2030; Casey Commission to report in 2027	Next Parliament	England
Carer's Allowance	Earnings "cliff edge" replaced by a taper	During 2030–31	England and Wales
Supported housing	A licensing regime to enforce national standards	From 2027–28	England
NHS winter pressures	£190 million for the NHS	This winter	England

Pay: the minimum wage from April 2027

From 1 April 2027, the National Living Wage for workers aged 21 and over rises by 3.9%, from £12.71 to £13.21 an hour. The government says it has accepted the Low Pay Commission's recommendations in full:

18 to 20: £11.27;
16 to 17 and apprentices: £8.31;
accommodation offset: £11.53 a day.

The Budget says the rise is "equivalent to an increase of £910" in gross annual earnings for a full-time worker on the National Living Wage. More detail is in our minimum wage 2027 story.

National Insurance and tax

The Budget states there's "no increase to the headline rates of income tax, National Insurance contributions or VAT". We found no change to employer National Insurance thresholds or the Employment Allowance in the Budget document.

Staff who drive for work

The Budget names care workers among the 2 million employees who use their own car for work. It makes permanent the temporary 55p-a-mile tax-free rate for the first 10,000 business miles, and raises the rate above 10,000 miles from 25p to 35p from 6 April 2027. The government estimates someone driving 6,000 business miles a year saves £120 in tax. If you run supported living or community services where staff drive between visits or houses, check your mileage policy against the new rates.

Money for adult social care

There's no new funding for adult social care or councils' care budgets in the Budget document. Instead:

National Care Service: the government will adjust the State Pension Triple Lock from April 2030 to "help build up a high-quality, preventative National Care Service in England that will provide older people with personal care free at the point of use".
Casey Commission: Baroness Casey's Independent Commission on Adult Social Care "will now report in 2027".
Spending review: the next spending review will take place in 2027.

For fee rates, the multi-year local government settlement for 2026–27 to 2028–29 still sets the scene. See our guide to negotiating fees with your council.

The Fair Pay Agreement

The Budget document doesn't mention the adult social care Fair Pay Agreement. The timetable and funding the government set out in July are covered in the Fair Pay Agreement timeline.

Immigration costs for sponsors

The Budget doesn't change the Immigration Skills Charge itself. It changes the tax treatment: from 28 October 2026, when an employer pays an Immigration Skills Charge or Certificate of Sponsorship fee, it won't be treated as a taxable benefit in kind for the worker. Legislation will follow in Finance Bill 2026–27.

Energy, business rates and VAT

Energy: the Budget's energy help is for households: the VAT cut on electricity is extended to July 2027, gas standing charges will be abolished on domestic bills, and a £100 Household Energy Payment is planned. The business discount it announces is for energy-intensive manufacturers. We found nothing aimed at care homes' energy bills.
Business rates: the changes announced target vape shops and adult gaming centres. We found no change aimed at care homes.
VAT: no change to VAT on care services in the Budget document.

Also in the Budget

Carer's Allowance: the earnings "cliff edge" will be replaced by a taper during 2030–31 in England and Wales. The government expects it to help around 48,000 carers.
Supported housing: a licensing regime to enforce national standards from 2027–28 (England).
Non-compete clauses: the government will legislate so non-compete clauses don't stop workers "in the everyday economy" moving jobs. The Budget names care workers among those affected. A consultation will follow.

What this means for your service

Budget for April 2027 now. Recalculate your wage bill at £13.21 for staff aged 21 and over, including on-costs such as employer National Insurance and pension contributions, and the knock-on effect on differentials for seniors and nurses.
Take it to fee talks. No new social care money means councils' fee uplifts for 2027–28 will come from existing settlements. Put your April 2027 costs in front of commissioners early.
Review mileage. Check what you pay staff who drive for work against the new tax-free rates.
Sponsors: ask your payroll provider to treat Immigration Skills Charge and CoS payments made from 28 October 2026 as non-taxable.
Don't assume changes start now. Most pay changes start on 1 April 2027; the Carer's Allowance taper comes in 2030–31.

This is general information, not legal or tax advice.