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John Healey’s 2026 Budget: Small-Scale Measures, Targeted Tax Changes and Their Immediate Impact

By Drooid · · How we work

In this breakdown

01

Core Event

On October 28, 2026, Chancellor John Healey delivered his first Autumn Budget. It introduced a £7 billion revenue-raising package that includes a temporary 6 % bank surcharge for 15 months, a £100 Household Energy Payment for up to 20 million English households, an extension of the VAT cut on electricity to July 1 2027, and a freeze of the fuel-duty cut.

Bloomberg

02

Background & Context

The budget arrives amid a global inflation shock from the Middle-East war, which pushed oil above $110 per barrel and raised UK debt-interest costs. Labour’s previous fiscal plan under Rachel Reeves left a £23.6 billion “headroom”; the Resolution Foundation now estimates that headroom has fallen to about £12 billion. Healey pledged to keep Labour’s manifesto promise not to raise tax on working people while still funding defence, Ukraine aid and regional devolution.

The Guardian

Visual evidence

Images from the story

HMRC Crackdown is the Budget’s Biggest Money-Raiser | Combined total (2026-27 to 2031-32), positive measures raise money
HMRC Crackdown is the Budget’s Biggest Money-Raiser | Combined total (2026-27 to 2031-32), positive measures raise moneyPhoto: bloomberg
Budget 2026: No U-turn or change to family farm tax in Budget
Budget 2026: No U-turn or change to family farm tax in BudgetPhoto: farmersguardian
The chancellor announced a swathe of policy changes in his first Budget (Image
The chancellor announced a swathe of policy changes in his first Budget (ImagePhoto: moneyweek
UK Budget Energy Bill Measures Dwarfed by Forecast Increase
UK Budget Energy Bill Measures Dwarfed by Forecast IncreasePhoto: bloomberg
Clustered bar chart of projected UK Budget tax increases over six years from 2025-26 to 2030-31: Fiscal creep constitutes by far the largest single tax increase, escalating rapidly from 2028-29 to reach nearly £13bn in 2030-31. Salary sacrifice NICs generates around £4.7bn in 2029-30 before dropping to under £3bn in 2030-31, while general 'Other' measures and tax gap compliance also rise substantially towards the end of the forecast period. Title: Budget tax increases over the next six years Ve
Clustered bar chart of projected UK Budget tax increases over six years from 2025-26 to 2030-31: Fiscal creep constitutes by far the largest single tax increase, escalating rapidly from 2028-29 to reach nearly £13bn in 2030-31. Salary sacrifice NICs generates around £4.7bn in 2029-30 before dropping to under £3bn in 2030-31, while general 'Other' measures and tax gap compliance also rise substantially towards the end of the forecast period. Title: Budget tax increases over the next six years VePhoto: taxpolicy
Excerpt of paragraph 2.54 from a UK Budget policy document concerning corporate tax and capital allowances: 2.54 The government is maintaining stability for businesses and investment through its commitment to the Corporate Tax Roadmap, capping the headline rate at 25%, currently the lowest in the G7, and maintaining the UK’s world-leading full expensing regime. At this Budget, the government has decided to raise revenue by reducing the main rate of writing down allowances by two percentage point
Excerpt of paragraph 2.54 from a UK Budget policy document concerning corporate tax and capital allowances: 2.54 The government is maintaining stability for businesses and investment through its commitment to the Corporate Tax Roadmap, capping the headline rate at 25%, currently the lowest in the G7, and maintaining the UK’s world-leading full expensing regime. At this Budget, the government has decided to raise revenue by reducing the main rate of writing down allowances by two percentage pointPhoto: taxpolicy
The chancellor is facing a delicate balancing act to provide measures to ease the cost of living crisis while increasing growth and sticking to fiscal rules. Composite: PA;EPA;SHUTTERSTOCK
The chancellor is facing a delicate balancing act to provide measures to ease the cost of living crisis while increasing growth and sticking to fiscal rules. Composite: PA;EPA;SHUTTERSTOCKPhoto: theguardian
Healey’s Budget Had the Most Measures Since 2010 | But the average measure was just over a quarter of the usual size
Healey’s Budget Had the Most Measures Since 2010 | But the average measure was just over a quarter of the usual sizePhoto: bloomberg

03

Data & Statistics

  • Energy-payment scheme: £2.6 billion for 20 million households.
The Guardian
  • VAT cut on electricity: £3.7 billion over two fiscal years.
Bloomberg
  • Fuel-duty freeze extension: £1.4 billion over two years.
Budget 2026: fuel duty cut and HGV VED holiday extended
  • Business-rate relief: threshold raised to £18 000, removing rates for roughly 70 000 small retail, hospitality and leisure premises.
Bloomberg
  • Savings-income tax rates rise by 2 percentage points to 24 %, 44 %, 49 % from April 6 2027.
how will it affect small businesses?
  • Property-income tax rates rise by the same margins from April 6 2027.
Autumn Budget 2026: key tax changes
  • BADR lifetime limit cut from £1 million to £500 000 effective April 6 2027.
Budget 2026: four tax announcements to have on your radar
  • First-year capital-allowance rate rises to 50 % from January 1 2027; main writing-down allowance falls to 12 % from April 1 2027.
how will it affect small businesses?

04

Official Statements & Responses

  • Healey called the package “breathing space” for Britain, stressing that the £100 payment and removal of gas standing charges would protect millions from “global economic storms”.
Budget 2026: No U-turn or change to family farm tax in Budget
  • Treasury officials said the bank surcharge and tax-gap measures would generate £3.2 billion in additional revenue.
Bloomberg
  • Former Treasury minister Rachel Reeves highlighted the new pension-tax allowance that shields low-income pensioners from income tax once the state pension exceeds the personal allowance.
Budget 2026: Poorest pensioners shielded from income tax

05

Criticism & Opposition

  • Business-rate relief was welcomed by small-business groups but criticised by larger firms as insufficient to offset the higher writing-down allowance.
Budget 2026: The small business measures entrepreneurs need to know
  • Eloise Walker of Pinsent Masons warned that the “simplification” consultation could create “greater complexity”.
UK Budget 2026: corporate tax ‘simplification’ could add complexity for businesses
  • Nick Bustin of HaysMac argued the package will leave most workers no better off despite the National Living Wage rise and the £100 council-tax rebate.
Budget 2026: No ‘breathing space’ on employment taxes

06

Conflicting Reports & Gaps

  • The Resolution Foundation puts fiscal headroom at £12 billion, while ING economists suggest £15 billion is needed for market confidence.
The Guardian
  • The Institute for Fiscal Studies projects that higher savings-income tax rates could raise rents, but the magnitude remains uncertain.
Autumn Budget 2026 review

07

What’s Next

  • The bank surcharge expires on March 31 2028.
Autumn Budget 2026: key tax changes
  • The first-year capital-allowance increase takes effect on January 1 2027; the reduced writing-down allowance begins April 1 2027.
Autumn Budget 2026: key tax changes
  • The pension-tax allowance will be reviewed annually, with the next adjustment due by April 5 2030.
Autumn Budget 2026: key tax changes
  • Consultation on the new “founders’ relief” and the revised BADR runs until 30 November 2026.
UK Budget 2026: corporate tax ‘simplification’ could add complexity for businesses