Chancellor John Healey is set to deliver his first Autumn Budget in the House of Commons on Wednesday, October 28, as Britain faces a “tough” financial position. The Budget is expected to include measures to raise revenue, with speculation over tax changes and new State Pension rules.
Bank Tax Increase and Cost-of-Living Support
The most significant revenue-raising measure expected in the Budget is an increase in the rate banks pay on their profits, widely reported last week. This could fund cost-of-living support for households and businesses. Healey has acknowledged Britain's “tough” position and is reported to be downplaying the prospect of major revenue-raising measures.
Prime Minister Andy Burnham warned that Healey does not have “huge room for manoeuvre” as he draws up his first Budget. Burnham said: “We’re thinking all of the time: ‘How do we take a bit of pressure off people, give them some breathing space?’ It’s why one of the first decisions I took as Prime Minister was to remove VAT off electricity bills.”
Help-to-Buy Scheme for First-Time Buyers
Burnham has previously announced a new help-to-buy scheme to assist first-time buyers without the 'bank of Mum and Dad'. Under the scheme, announced in September, first-time buyers could get keys to their home with just a 2.5 per cent deposit saved. A loan worth 20 per cent of the property’s value will be available, initially interest-free.
With the national average first-time home costing £230,000 according to Rightmove, a buyer could put down a deposit of £5,750 and access a loan of up to £46,000. Full details will be set out at the Budget.
Pension Tax Rules and Business Rates Review
A minister pledged in September that the government will reveal new tax rules for pensioners at the Budget. The State Pension is set to rise to around £13,036 for full new State Pension claimants next year, above the income tax threshold of £12,570, frozen since 2021. Pensions minister Torsten Bell said details would be outlined in the Budget.
The Treasury has called in expert Jerry Schurder to review business rates calculations for pubs and hotels, with a report due by the end of March. This follows a 20 per cent cut to business rates bills announced for pubs, social clubs, and live music venues from April next year.
Other Measures Under Consideration
Reports suggest Healey has ruled out an increase in capital gains tax (CGT) after warnings it could cost the government money. However, proposals from Labour donor Dale Vince to fund a rise in the personal allowance to £15,570 by raising CGT and halting interest payments on Bank of England reserves have been examined.
The TUC has backed reversing former Chancellor Jeremy Hunt’s reduction in the surcharge banks pay on profits from 8 per cent to 3 per cent, which could raise £2.25 billion a year. The IPPR has urged a 2 per cent tax on online sales and a 1 per cent tax on click and collect services, potentially raising £1.5 billion for business rates relief.
ABTA has called for a Youth Experience Scheme with the EU to ease restrictions for Brits working abroad. Burnham has also left the door open to stopping a planned fuel duty rise in January, saying “every possible measure” is being considered to ease driving costs.
