John Healey will unveil his first Budget as Chancellor on Wednesday as families continue to struggle with the cost of living.

New PM Andy Burnham has vowed to bring “hope” back to Britain, but is facing some difficult choices as the world continues to feel the impact of conflict in the Middle East.

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Here The Mirror looks at what could be announced and plans that have already been unveiled in recent weeks.

Bank Tax

Mr Healey is planning to increase taxes on the bank sector, of which the biggest four collectively made about £15billon profit in the first six months of this year.

Options to do this include reversing a reduction in the surcharge that banks pay on corporation tax, from 8% to 3%. Another could be raising the bank levy – a small percentage charged on loans.

Trade unions and think tanks have repeatedly lobbied for heavier taxation for banks.

The Institute for Public Policy Research recommended generating £1billion from a temporary surcharge on commercial banks’ windfall profits, saying the proposals would help rebuild the Chancellor’s fiscal buffer which it estimated has dropped by up to £15 billion since the spring.

Council homes

Britain is set for a £1billion boost to council housing which can deliver up to 10,000 homes in the Budget.

The announcement will take the total capital ­investment in the Social and Affordable Homes Programme to more than £40bn over the next 10 years. The government also plans to help more councils borrow for ­housebuilding by extending ­preferential rates.

A Treasury spokesman said: “For years families have been locked out of a secure and affordable home because we simply haven’t built enough. The Prime Minister promised to restore the public housing stock.

“This Budget will go further on that ambition through significant ­investment in affordable housing and helping councils borrow to build so we can replace what has been sold and give people a place to live.”

Energy Bills

The PM moved immediately to offer relief on energy bills, cutting VAT on household electricity bills from 5% to zero, saving a typical household £45 a year.

However, with energy bills expected to rise at the start of next year, more support is expected.

One option reportedly under consideration is boosting the Warm Home Discount, a £150 reduction on bills for around six million households on means-tested benefits, with another £100 of support.

Earlier this month the Energy Secretary Miatta Fahnbulleh told Energy UK’s annual conference in London: “We know we need to do our part to give people a little more breathing space.”

Elsewhere, the Chancellor told 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.”

Big change to state pension

Healey is expected to announce a rise in the tax-free personal allowance for low-income pensioners in his Budget this Wednesday.

The new state pension is set to rise by £489 to £13,036 a year from next April, with official confirmation of this to be announced in the Budget. This pushes the state pension above the tax-free allowance of £12,570 for the first time.

The government has previously promised that those who only receive the state pension as income will be shielded from paying tax, promising further details in the Budget. The Times reports that this will be done by raising the personal allowance for low income pensioners to £13,036.

This would shield almost one million pensioners from paying income tax. It will then continue to rise in line with increases to the state pension over the course of this parliament, the newspaper reports, in a move that is expected to cost taxpayers £200million a year by the end of the decade.

Boost for mayors

Mayors and regional leaders are to be handed more money and more powers to help transform communities.

The plans will give local officials more flexibility and authority to make investment decisions. The Prime Minister, a former Greater Manchester Mayor, claimed the move would stop local leaders having to go “cap in hand” to Westminster for investment.

The Government has allocated an initial £285million next year, with the move intended to end the reliance on different bidding pots managed from Whitehall.

Rough sleeping

At the weekend Mr Burnham announced funding behind his pledge to offer every rough sleeper a bed this Christmas will be doubled at the Budget.

No10 said cash to be unveiled at Wednesday’s Budget will commit a further £432million to tackle rough sleeping – boosting total funding to £874m. It said the funding would help deliver the ambition to offer people a route off the street before Christmas while sustaining support for years to come.

Mr Burnham, who outlined his mission to end rough sleeping during his first speech as PM outside No10, said: “Rough sleeping isn’t a fact of life. It’s a thing governments either choose to accept or don’t. Well I don’t accept it. That’s why we’re doubling funding so that people aren’t just offered a safe route off the streets this winter but have that same support right through the rest of this Parliament too.”

Income tax, national insurance and VAT

The Chancellor is not expected to increase Income tax, national insurance or VAT, with no rise being a long-standing Labour manifesto commitment from the 2024 general election.

Tax on online retailers

Online giants such as Amazon and eBay could be be forced to collect tax from all foreign sellers for the first time under plans to be announced in the Budget.

Reports say Chancellor John Healey will close a loophole by cracking down on mainly overseas sellers that abuse lax rules and enforcement to avoid paying VAT on sales. According to the Times, Mr Healey will say that the move will raise £1billion for the Treasury, which will be used to cut business rates for high street shops.

Under the shake-up, websites would be forced to collect VAT from other retailers where they have a turnover of more than £90,000 a year, regardless of where they are based.

Fuel Duty

With oil prices soaring due to the US war with Iran, Mr Healey could freeze fuel duty, saving cash for millions of motorists.

Previous Chancellor Rachael Reeves had announced an increase to fuel duty of 3p a litre in January and 2p a litre in March.

The Road Haulage Association has called on Mr Healey for a 15p per litre rebate for “essential users of fuel”. This would include HGV drivers, coach drivers and van drivers.

Mansion Tax

The Chancellor has also considered expanding Ms Reeves’s so-called mansion tax.

The policy sees properties worth more than £2m would be subjected to an annual levy of between £2,500 and £7,500 from April 2028.

The Office for Budget Responsibility calculated that it would raise about £400m per year, and the Chancellor has drawn up plans to lower the valuation threshold to £1.5m, a move that would draw an extra 200,000 homes into the scope of the tax.

However, Labour MPs believe the plans have been dropped and will not appear in the Budget.

Wealth tax and Capital Gains

One thing we are not expecting is hike in capital gains tax, having been ruled out by the Chancellor.

Cabinet ministers Wes Streeting and Louise Haigh had previously for a rise in the tax, which applies to the profit made from selling off assets like a house or shares.

Mr Healey now ruled out the move after being told it could end up costing the Government money if wealthy people leave the country or defer selling off assets.

What to Expect in John Healey’s Budget 2026: From Bank Taxes to Energy Bills

Britain is preparing for a significant financial announcement as Chancellor John Healey gets ready to deliver his first Budget on October 28, 2026. With households facing rising living costs, businesses demanding greater support and the government under pressure to control public borrowing, the announcement is expected to shape the economic debate for months to come.

Prime Minister Andy Burnham has promised to give families and businesses more breathing space, but delivering that promise will not be easy. The government must find ways to support struggling households while financing public services, meeting defence commitments and maintaining confidence in Britain’s public finances.

Several measures are attracting particular attention, including possible increases in taxes on banks, additional assistance with household energy bills, changes affecting motorists and new arrangements for pensioners.

Although some policies have already been announced, other proposals remain subject to speculation until Healey presents the Budget in Parliament.

Bank Taxes Could Become a Major Source of Revenue

One of the most closely watched issues is whether the government will increase taxes on Britain’s banking sector.

Major banks have reported substantial profits, prompting calls from trade unions and some policy groups for lenders to contribute more towards public spending.

The government is reportedly considering changes to the bank surcharge or the bank levy. These measures could provide additional revenue without directly increasing the main rates of income tax, National Insurance or VAT.

Supporters of higher bank taxes argue that financial institutions should make a greater contribution when profits are strong and public finances are under pressure.

They believe additional revenue could help finance temporary assistance for households and reduce the need for further borrowing.

However, the banking industry has raised concerns about the potential consequences.

Banks play an important role in lending to businesses, financing investment and providing mortgages to households. If additional taxes increase their operating costs, some institutions could respond by raising fees, adjusting lending conditions or reducing other expenses.

The extent of any impact would depend on the final policy and how individual banks responded.

Healey therefore faces a difficult balance between raising revenue and maintaining an environment in which Britain’s financial services industry can continue supporting economic growth.

Energy Bills Remain a Major Concern for Families

Household energy costs are expected to be another central issue in the Budget.

Families across Britain are concerned about the cost of heating their homes, particularly as colder weather increases demand for electricity and gas.

The government has already removed VAT from household electricity bills temporarily, a measure introduced in October that is expected to save a typical household around £45 annually under the relevant price-cap arrangements.

However, further pressure is anticipated. Forecasts before the Budget suggested that a typical annual energy bill could rise by approximately £276 in January, although the final amount will depend on the applicable price cap and household circumstances.

The possibility of additional assistance has consequently attracted considerable attention.

One option under discussion is targeted support for households on means-tested benefits, potentially through an expansion of the Warm Home Discount.

Such assistance would aim to direct financial help towards people who are particularly vulnerable to rising heating costs.

For pensioners, low-income families and people with limited savings, even a relatively modest reduction in energy expenses could make a difference during the winter months.

Nevertheless, targeted support would not necessarily benefit every household experiencing financial difficulties.

Some families may have incomes slightly above eligibility thresholds while still struggling to cover rent, food, transport and utility bills.

The government will therefore face questions about how assistance should be distributed and whether the proposed measures would provide enough relief.

Fuel Duty and the Cost of Driving

Motorists will also be watching the Budget for decisions about fuel duty.

Petrol and diesel prices affect household finances as well as the operating costs of businesses that depend on road transport.

For people who commute long distances, work in rural areas or rely on vehicles for their jobs, changes in fuel costs can have a direct effect on disposable income.

There has been speculation that Healey could extend the existing fuel-duty freeze or abandon planned increases.

Such a decision could offer some protection against rising costs at petrol stations.

However, maintaining lower fuel duties would also limit the revenue available to the government.

Ministers would need to consider the effect on public finances alongside the potential benefits for motorists and businesses.

The issue is particularly important for transport companies, delivery services, agricultural businesses and small firms that cannot easily reduce their dependence on vehicles.

Any announcement would need to clarify the timing of changes and whether the measures applied to petrol, diesel or other categories of fuel.

Pensioners Await Clarity Over Their Income

Pensioners are another group with a significant interest in the Budget.

The state pension is scheduled to increase from April 2027 under the government’s pension uprating arrangements. The amount individuals receive will depend on their entitlement and the applicable rules.

However, the interaction between pension increases and income tax has created concerns for people whose retirement income is close to the personal allowance.

If the state pension rises above the relevant tax-free threshold, some pensioners who previously paid no income tax could face a liability unless additional arrangements are introduced.

Reports ahead of the Budget have suggested that the government may adjust the personal allowance for pensioners who rely solely on the state pension.

If confirmed, such a measure could help protect eligible retirees from paying income tax on their state pension alone.

The details will matter considerably.

Pensioners with private pensions, employment income or other taxable earnings may face different circumstances from those who depend exclusively on the state pension.

Clear guidance would therefore be essential to explain who qualifies and how any changes would operate.

For older people managing fixed incomes, uncertainty about taxation can make it difficult to plan household budgets.

The Budget is expected to provide further information about the government’s approach.

More Support for Housing and Local Communities

Housing is another area likely to feature prominently in the government’s plans.

The shortage of affordable homes has made it difficult for many younger people and families to purchase property or find secure accommodation at a manageable cost.

The government has been working on proposals to expand affordable housing provision and give local authorities greater opportunities to finance construction.

Additional investment could help councils build more homes, support regeneration and address local housing shortages.

However, building programmes take time, and funding announcements do not immediately translate into completed properties.

The availability of suitable land, construction costs, planning decisions and the capacity of the building industry will all influence the results.

First-time buyers will also be looking for details of proposed schemes designed to reduce the deposit required to purchase a new-build property.

Such initiatives could make home ownership more accessible for eligible households, but their effectiveness would depend on the eligibility criteria, the supply of available properties and the terms of any government-backed loans.

For renters, the central question will remain whether additional housing supply can eventually improve affordability and increase access to secure accommodation.

Online Retailers Could Face Tighter Tax Rules

The Budget may also include measures targeting online marketplaces and overseas sellers.

The government is considering ways to strengthen VAT collection and address loopholes that allow some businesses to avoid their tax obligations.

Online platforms could face greater responsibility for collecting VAT on certain sales, including transactions involving overseas sellers.

Supporters argue that stronger enforcement could improve tax compliance and help create fairer conditions for high-street retailers.

Traditional shops often face property costs, staffing expenses and other overheads that online businesses may not experience in the same way.

If some online sellers avoid taxes that comparable businesses must pay, the competitive environment can become distorted.

However, changes would need to be implemented carefully to avoid unnecessary administrative burdens for legitimate small businesses.

The government would also need to explain how the rules would apply to different types of sellers and transactions.

Defence Spending and Public Finances

Beyond household costs, Healey must address the government’s defence commitments.

The government has promised to explain how it will finance its defence plans and work towards its longer-term NATO spending objective.

Meeting these commitments will require substantial resources, potentially creating difficult choices about spending priorities.

Defence investment can support national security, military readiness and parts of the domestic industrial economy.

However, additional spending must be reconciled with the government’s fiscal rules, which aim to control borrowing and place public finances on a sustainable path.

The government has limited room to introduce expensive new programmes without explaining how they will be funded.

Healey must therefore consider a combination of taxation, spending priorities and economic growth.

The Office for Budget Responsibility is expected to publish updated forecasts alongside the Budget, providing an assessment of the economy, government borrowing and the outlook for public finances.

These forecasts will help determine how much flexibility the government has to pursue its plans.

What the Budget Could Mean for Britain

John Healey’s first Budget comes at a time when the government faces competing demands from households, businesses and public services.

Bank taxes could generate additional revenue, while targeted energy support and fuel-duty decisions could offer some relief from rising living costs.

Pensioners will want clarity about taxation and retirement income, while prospective homeowners will be looking for practical measures to improve access to affordable housing.

At the same time, businesses will be watching for changes that could affect investment, employment and operating costs.

The government must balance these competing priorities without undermining confidence in the economy or placing excessive pressure on public finances.

The final announcements will determine which proposals become policy and how much assistance different groups receive.

For millions of households, the most important question will be whether the Budget makes everyday expenses more manageable.

For businesses, the focus will be on whether the measures encourage investment and provide greater certainty.

And for the government, the challenge will be demonstrating that support for families can be delivered alongside responsible financial management.

The October 28 Budget will provide a clearer picture of John Healey’s economic priorities and the choices facing the government. Until the Chancellor announces the final measures, however, proposed tax changes and additional household support should be treated as possibilities rather than confirmed policy.

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