Key Measures Expected in UK Finance Minister Healey’s First Budget Announcement
By Andy Bruce
Oct 26 (Reuters) - British finance minister John Healey will set out his first budget on Wednesday under pressure to deliver on promises to ease the cost of living for households and to help businesses.
However, Healey's options are limited by high government borrowing costs and the big tax increases introduced by Healey's predecessor Rachel Reeves.
Here's what is likely to be included in the first budget since Andy Burnham became prime minister in July.
Main Measures and Announcements in the Budget
Main Measures: Defence, Bank Tax, Fiscal Devolution
• Burnham said on Monday that the budget would set out a plan to fully fund the government's defence commitments alongside a pathway to hitting a 2035 NATO spending pledge
• The budget's main revenue-raising measure will probably be a levy on banks to fund a targeted, temporary package of support for households. The Guardian said energy subsidies worth more than £1 billion ($1.3 billion) could help mostly lower-income households, a smaller package than other recent support programmes
• Healey is expected to outline fiscal devolution plans to transfer power and funds from Westminster to regional leaders across England, who will be able to retain a share of locally generated tax. He has already announced a new £1.5 billion borrowing facility
Defence Commitments
• Plan to fully fund defence commitments and pathway to 2035 NATO spending pledge
Bank Levy and Household Support
• Likely introduction of a bank levy to fund temporary household support, including energy subsidies
Fiscal Devolution
• Plans to transfer power and funds to regional leaders, allowing retention of locally generated tax
Announced Measures
Support for State Business Lender and Infrastructure Bank
• £20.4 billion of additional support for a state business lender and an infrastructure bank over roughly half a decade
Funding for AI Health and Security Threats
• £600 million of funding geared towards defending against health and security threats from artificial intelligence
Trade and Business Support
• Plans to reduce paperwork and extend the suspension of some trade tariffs to help businesses save almost £800 million a year
Efforts to End Rough Sleeping
• A doubling of funding for efforts to end rough sleeping
Other Possible Measures
Taxation Changes
Family Business Transfers
• Plans to charge income tax on transfers of family businesses to the next generation are likely to feature, the Telegraph said
Online Marketplace Tax Crackdown
• Healey also plans a £1 billion tax crackdown on online marketplaces such as Amazon and Temu, the Times reported
Gambling Industry Tax
• British media have speculated about possible tax hikes for the gambling industry
Mansion Tax Scope
• Healey will not expand the scope of a planned "mansion tax" by lowering the threshold from £2 million to £1.5 million in the budget, the Financial Times reported
Fuel Duty and Capital Gains Tax
• An emergency cut in fuel duty introduced after Russia's full-scale invasion of Ukraine is set to expire in January. However, no government has raised fuel duty since 2011, and Healey hinted last month that he might stop the increase that the expiry would bring
• Healey has rejected calls to raise capital gains tax in an attempt to avoid a hit to business investment
($1 = 0.7487 pounds)
(Writing by Andy Bruce; Editing by Hugh Lawson)