Chancellor John Healey is preparing to unveil the first Budget under Andy Burnham's Labour Government, with the statement due in the House of Commons on Wednesday, October 28. He has warned the public to expect a tough Budget given the state of the public finances, hit by higher inflation fuelled by Donald Trump's Iran war.
He is expected to raise some taxes, with banks in the City braced for a new £2 billion-a-year Treasury raid. Here is a look at the rumours, leaks and speculation ahead of the Chancellor's speech.
Business rates cut
Mr Healey is expected to announce an increase in the threshold at which small companies start paying business rates from £12,000 to £18,000, according to The Sunday Times. The move would mean thousands of high-street shops, cafes, pubs and other small businesses would no longer have to pay business rates. The figures relate to "rateable value" — the estimated annual rental value of a commercial property.
The Chancellor has strongly hinted he wants to cut costs for businesses by slashing red tape. In an interview with The Times he insisted he wants to pitch his budget at "bloody-minded entrepreneurs". However, Treasury sources have warned businesses not to expect too many tax cuts, with new measures instead focused on removing bureaucracy, such as abolishing reporting requirements for many smaller firms.
Energy bills and Warm Homes Discount
The Warm Homes Discount, which takes £150 off winter energy bills for eligible households, could be doubled for people on benefits at the Budget. Broadcaster Martin Lewis said ministers "have to put a support mechanism in place" to increase the payments. It comes after Andy Burnham confirmed the Chancellor had been asked to investigate removing standing charges from gas bills, a move that would save households around £108 a year.
The Prime Minister has already cut VAT on electricity bills, and Mr Healey has hinted at further relief in the Budget, telling ITV News: "Energy costs are punishing at the moment. We will do what we can in the Budget, both for business and for households, to give people a bit of breathing space."
Online marketplace tax crackdown
The Chancellor is preparing to announce that online marketplaces like Amazon and eBay will be made responsible for collecting tax owed by all retailers selling on their platforms, according to The Times. The change would make websites responsible for collecting VAT at source for retailers on their platform with an annual turnover of more than £90,000, regardless of where they are based. The move could raise up to £1 billion for the Treasury and would fund the business rates cut for high-street shops, the newspaper reports.
Bank tax and other measures
There is widespread speculation that the Chancellor will target banks in the Budget. Reversing cuts to the bank surcharge made by former chancellor Jeremy Hunt is understood to be under discussion, The Guardian reports. The move would raise more than £2 billion a year.
Speculation has also been rife that the Budget could include a significant change to the high-value council tax surcharge — or "mansion tax" — announced by Rachel Reeves last year. It will see owners of properties valued at over £2 million start paying a regular annual charge worth up to £7,500 from April 2028. Last month, The Times reported that the Chancellor is considering lowering the threshold to £1.5 million, which would make nearly 62,000 more London homeowners subject to the tax. However, The Standard reported that London MPs are confident Mr Healey has ruled out the move. "We are quietly confident it will not be brought down to £1.5 million," a London Labour source told the Standard.
The Chancellor has rejected calls by senior Labour MPs to raise capital gains tax (CGT) to the same levels as income tax, according to The Financial Times. However, The Telegraph reports that CGT could still be raised by a smaller amount.
Rachel Reeves announced an increase to fuel duty of 3p a litre in January and 2p a litre in March. But as the US war with Iran sends oil prices surging, The Times and others are reporting that Mr Healey could freeze duty in a boost for millions of motorists.
The Chancellor is reportedly set to make the Government's revived Help to Buy scheme more generous, particularly for those in London. Mr Healey was set to exclude households earning more than £90,000 outside the capital and £110,000 in the city from the Your First Home scheme. It offers first-time buyers a 20% equity loan to help them buy a new-build home, with an initial interest-free payment and a minimum deposit requirement of 2.5%. However, The Times reported that Mr Healey was concerned this would exclude many modest earners and has decided to instead set the cap at £110,000 outside London and £140,000 in the capital.
Mr Healey is also expected to set out how he will prevent people relying just on the state pension from paying income tax. The annual new state pension will be pushed up to around £13,036 next year, a 3.9% rise from April in line with earnings under the triple lock, taking the payment above the £12,570 personal tax allowance. Ministers have repeatedly promised they would prevent people whose only income is the state pension from being hit with income tax, and The Times said Mr Healey will do that by announcing a rise in the tax-free allowance for low-income pensioners to £13,036, costing taxpayers £200 million a year by 2030.
The Chancellor is reportedly considering levying income tax on business owners when they hand their company down to their children. Currently inheriting a firm can be structured so it only attracts capital gains tax, which is charged at a lower rate. But Mr Healey is said to be considering scrapping a loophole that means a family can convert holdings in their business into "redeemable shares", which the firm can buy back using its profits. The current system attracts capital gains tax, charged at 24% for higher-rate payers, compared with 45% for income tax. The move, which would hit entrepreneurs wanting to retire, could generate £300 million a year for the Treasury, The Telegraph reports.
