Budget 2026: What tax rises and spending pledges will Chancellor announce?

Chancellor John Healey is preparing to unveil the first Budget under Andy Burnham’s Labour Government.

Here, the Standard looks at the rumours, leaks and speculation ahead of Mr Healey’s big speech.

Business rates cut

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.

Cutting costs for firms

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”.

But Treasury sources have warned businesses not to expect too many tax cuts and instead new measures will focus 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 minister have “have to put a support mechanism in place” to increase the payments.

The Prime Minister has already cut VAT on electricity bills and Mr Healey has hinted that 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 who have an annual turnover of more than £90,000, regardless of where they are based.

The move could raise up to £1billion for the Treasury and would fund the business rates cut for high-street shops, the newspaper reports.

Chancellor John Healey will deliver his Budget on Wednesday, October 28

PA Wire

Bank Tax

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 £2billion a year.

John Healey is rumoured to be set to target the City with a levy on banks

AFP/Getty

Mansion Tax

Speculation has been rife that the Budget will could include a significant change to high-value council tax surcharge – or “mansion tax” - which was announced by Rachel Reeves last year.

It will see owners of properties valued at over £2m 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 £1.5m, which would make nearly 62,000 more London homeowners subject to the tax.

“We are quietly confident it will not be brought down to £1.5 million,” a London Labour source told the Standard.

Capital Gains Tax

Fuel duty

Rachael 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 be set freeze duty in a boost for millions of motorists.

Help for first time buyers

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.

Tax on pensioners

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.

Business inheritance

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.

Alcohol tax rises

John Healey is reportedly set to add 2p to the price of a pint in a fresh blow for struggling pubs.

The Chancellor is expected to push ahead with an increase in alcohol duty in his maiden Budget, despite industry pleas to freeze the tax to help drinkers and the strained pub trade.

Under Mr Healey’s plan, reported by the Telegraph, the duty charged on every pint sold would rise in line with Retail Prices Index (RPI) inflation, which is set at 3.9%.

Increasing the tax at this rate would take duty on a pint from 50p to 52p.

The increase is expected to add between 10p and 12p to the price of a bottle of wine, while a bottle of 37.5% gin would rise by 35p.

Household Goods

The Government has announced it will reduce import tariffs on more than 100 products, helping lower import costs on family favourites including baked beans, chocolate and gherkins.

Together with tariff suspensions already introduced, households could save up to £21 on their food shop each year, the Government said.

Minimum wage rise

John Healey will reportedly announce plans to increase the minimum wage by nearly 4%.

The Times reported that the national living wage, which applies to those aged 21 and over, is expected to rise from £12.71 to around £13.20 — an increase of 3.9 per cent.

However, it said the chancellor has decided not to repeat the big rises of the past two budgets in the national minimum wage, which applies to those aged 18 to 21.

It will rise broadly in line with the rate for older workers — from £10.85 to around £11.27, an increase of 3.9 per cent. it reported.