What to anticipate in John Healey’s Budget 2026 – from financial institution tax to vitality payments

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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John Healey will unveil his first Budget as Chancellor next week 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.

The Chancellor will unveil his plans at the despatch box in the Commons from around 12.30pm next Wednesday, and has already acknowledged that Britain finds itself in a “tough” position.

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.

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.”

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.