Northern Ireland Budget 2026: Heating Oil Tariff Cut and Fuel Duty Relief Extended

Northern Ireland households and businesses are set to receive a package of support following Budget 2026.

Key measures include:

• A temporary suspension of the 4% tariff on kerosene heating oil
• The 5p-per-litre fuel duty cut extended until 1 July 2027
• Higher tax-free mileage rates for people using their own vehicles for work
• National Living Wage rising to £13.21 an hour from April 2027
• £270 million in additional funding for Northern Ireland public services
• £7.5 million for Belfast’s Cyber AI sector
• £1 million towards a new Northern Ireland Investment Summit

What Budget 2026 Means for Northern Ireland

The Northern Ireland Budget 2026 measures include support aimed at households facing high heating and motoring costs, alongside new investment in jobs, skills and public services.

The package was announced on Wednesday, 28 October, with the UK Government saying it is designed to provide financial “breathing space” during continued pressure on household budgets.

One of the measures most relevant to Northern Ireland is a temporary suspension of the tariff on kerosene used for home heating.

Around 61% of Northern Ireland households rely on heating oil, according to the UK Government.

Heating Oil Tariff to Be Suspended

The Government is suspending the current 4% tariff on kerosene heating oil.

The detailed Budget documents confirm that the suspension will take effect from 26 November 2026 and continue until 31 December 2028.

The measure is intended to reduce costs associated with imported kerosene and provide support for households that depend on oil heating.

However, this does not mean household oil bills will automatically fall by exactly 4%. Retail heating oil prices are affected by several factors, including wholesale costs, supply, distribution and market conditions.

Residents can also check current oil-price information through the Consumer Council’s home heating oil service.

5p Fuel Duty Cut Extended

Motorists will also continue to benefit from the temporary 5p-per-litre reduction in fuel duty.

The Government had been due to reverse the cut, but Budget 2026 extends it until 1 July 2027. The planned inflation-linked rise in fuel duty has also been delayed until that date.

The Government says fuel prices remain under significant pressure and pointed to diesel prices exceeding £2 per litre in parts of the UK during October.

Drivers in Northern Ireland can compare local petrol and diesel prices using the Northern Ireland Online Fuel Finder.

Red diesel relief also continues

The 3.7p-per-litre reduction in red diesel duty has also been extended until 1 July 2027.

This measure will particularly affect sectors including agriculture, haulage and other businesses that rely heavily on fuel.

Higher Mileage Rates for Workers

People who use their own cars or vans for work are also set to benefit.

The tax-free mileage rate of 55p per mile for the first 10,000 business miles is being made permanent.

From April 2027, the rate for mileage above 10,000 miles will rise from 25p to 35p per mile.

The change could benefit workers such as carers, tradespeople, social workers and others who regularly use their own vehicles while working.

National Living Wage to Rise to £13.21

Budget 2026 also confirms increases to the National Living Wage and National Minimum Wage from 1 April 2027.

The new rates include:

• National Living Wage: £13.21 per hour
• Ages 18 to 20: £11.27 per hour
• Ages 16 to 17 and eligible apprentices: £8.31 per hour

The increases represent a 3.9% rise.

The Government said around 140,000 workers in Northern Ireland had already received a direct pay rise following increases introduced in April 2026.

£270 Million More for Northern Ireland Public Services

The Northern Ireland Executive is also expected to receive an additional £270 million through Barnett consequentials during the Spending Review period.

The funding can be used by the Executive for devolved services including:

• Health
• Education
• Housing
• Other public services

The new money comes on top of an additional £740 million provided through Budget 2025 and the Spring Forecast 2026.

Investment in Cybersecurity and Northern Ireland Business

Budget 2026 includes several measures aimed at economic growth.

Queen’s University Belfast’s Centre for Secure Information Technologies Cyber AI Hub will receive £7.5 million in new research and development funding.

Northern Ireland’s cybersecurity and AI sector currently employs more than 2,700 people across around 140 companies.

A further £1 million will support a new Northern Ireland Investment Summit aimed at attracting international investment.

The Northern Ireland Executive will also receive funding to establish its own version of the British Industrial Competitiveness Scheme, aimed at reducing electricity costs for energy-intensive manufacturers.

Further Heating Oil Help Is Already Available

Separate from Budget 2026, eligible Northern Ireland households can currently apply for a £100 Home Heating Oil Support Scheme digital prepaid card.

Applicants must use heating oil as their main heating source and meet the scheme’s income or qualifying-benefit requirements.

Applications remain open until 31 March 2027.

Residents can check eligibility and apply through nidirect’s Home Heating Oil Support Scheme.

What Happens Next?

Several of the Northern Ireland Budget 2026 measures do not take effect immediately.

The kerosene tariff suspension starts on 26 November 2026, while the new minimum wage rates begin in April 2027.

The extended fuel duty reduction remains in place until 1 July 2027.

Northern Ireland Online will continue to track changes affecting fuel prices, household costs and local businesses.

Check fuel prices near you

With fuel costs continuing to fluctuate, use the Northern Ireland Online Fuel Finder to compare petrol and diesel prices at filling stations across Northern Ireland.