Andy Burnham’s new government will set out its fiscal plan on 28 October during chancellor John Healey’s first Autumn Budget and rumours are circulating that it could include tax hikes for top earners.
Burnham has said his government will stick to Labour’s 2024 manifesto and the previous government’s fiscal rules, limiting the tax-raising power of the new administration.
Labour’s manifesto explicitly stated that the government will not raise any of the ‘big three’ taxes – income tax, National Insurance contributions, or VAT. But that still leaves other tax hikes on the table.
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These three taxes together make up over half of the government’s total tax receipts: £718 billion of the 2025/26 tax year’s total £1.2 trillion came from the big three, according to HMRC.
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Burnham’s public commitment not to raise these taxes means his government is more limited in how it can raise extra revenue unless the economy grows quickly. That seems unlikely as GDP growth has been sluggish for years, and the UK now faces headwinds from the Iran war.
The Autumn Budget will be the first indication of how Burnham and his chancellor are looking to tackle these challenges. So what should you expect?
Will borrowing rise in the Budget?
Burnham and Healey have said they will follow the previous government’s three fiscal rules.
The most important two of these rules say that the current budget should be on course to be in balance or surplus by 2029/30, and public debt should be forecast to be lower in 2029/30 than 2028/29.
These make it more difficult for the government to borrow money to use for public spending, however Burnham said he will use “flexibility” within the fiscal rules in a briefing to political journalists on 20 July.
The first sign of what this may look like came from a report in The Times that revealed the Treasury was drawing up plans to increase borrowing by potentially as much as £9 billion a year by exploiting a loophole in the fiscal rules that allows borrowing to fund infrastructure investment or equity in companies.
A spokesperson for the Treasury said: “The chancellor is fully focused on his priorities, to boost business, help with the cost of living and support people in every postcode. “As has always been the case, the chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals."
Although rises to the three big taxes have been ruled out, other taxes may be hiked to bring more money into the government coffers.
This is especially necessary at a time when economic shocks have ploughed through the UK’s ‘fiscal headroom’, the government’s financial buffer that can be used to fund spending before it breaks its fiscal rules.
At the last spring statement, then-chancellor Rachel Reeves increased headroom to £23.6 billion, but experts suggest this has already significantly diminished as borrowing costs are higher and economic forecasts for metrics like immigration and inflation have shifted.
Analysis by KPMG suggests this headroom has been cut to just around £12 billion. That means new chancellor John Healey has a much smaller financial buffer which may need to be topped up at the Budget.
Will investments be taxed more in the Budget?
The primary way investments are taxed in the UK is through capital gains tax (CGT). This is levied at rates of 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers on all gains above the £3,000 annual tax-free CGT allowance.
However, reports in The Telegraph suggest the prime minister and chancellor are looking at a proposal by a major Labour donor to raise CGT to as high as 45%.
Energy entrepreneur Dale Vince has proposed raising capital gains tax rates to be in line with income tax bands. It would bring CGT rates to 20% for basic rate taxpayers, 40% for higher rate taxpayers, and 45% for additional rate taxpayers.
The increased rate would fund a general increase to the income tax personal allowance – which is the amount of taxable income you can earn tax-free each year. Vince proposes raising the allowance from £12,570 to £15,570, giving the lowest-fifth of earners £600 more in their pockets.
Vince said: “If Labour wants to get the economy moving, it should put money into the pockets of people who will spend it.
“Raising the personal allowance to £15,570 would give millions of people a meaningful boost, with the biggest benefit going to those on the lowest incomes. We can pay for it by making the tax system fairer – starting with capital gains and the billions we currently hand to banks in interest.”
It is not the first time that bringing capital gains tax and income tax bands in line with one another has been considered.
Burnham's defence secretary Wes Streeting has previously proposed the idea when running for the Labour leadership this summer, while close allies of Burnham, such as former Labour leader Lord Kinnock, have urged him to look at it.
Will property be taxed more in the Budget?
Property tax was targeted by former chancellor Rachel Reeves in the 2025 Autumn Budget when she announced a new ‘mansion tax’.
From April 2028, all homes worth £2 million or more are set to pay between £2,500 and £7,500 more a year as part of an additional council tax surcharge. High value homes will be split into four bands, and the more expensive your home is, the more you would pay.
Reports in The Times suggest Burnham and Healey are looking at reducing this threshold down to £1.5 million to rake in more tax revenue.
The move could raise around £800 million a year for the Treasury, but would more than double the number of properties expected to be caught by the tax.
Under the £2 million threshold, only around 134,000 households would need to pay the additional levy, but this balloons to around 271,000 households under a £1.5 million threshold.
Lowering the threshold is a “live discussion” in the Treasury, according to government sources quoted by The Times, but the Treasury has refused to officially confirm or deny this.
A spokesperson for the Treasury said: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”
Rumours also recently circulated that Burnham could look at replacing stamp duty and council tax with a flat proportional property tax or land value tax following a report from The i Paper.
After backlash from many in the property industry, Number 10 distanced itself from the proposal, with a spokesperson saying rumours Burnham was considering the taxes were “not true”.
Will a wealth tax be introduced in the Budget?
Since last year there has been a lot of speculation over whether the UK could introduce some form of wealth tax – a tax levied on net wealth rather than income.
Reeves ruled it out in the run-up to her 2025 Budget, but with a new chancellor, some worry a wealth tax could be on the cards again.
New fears were stoked when Burnham refused to rule out a wealth tax when asked by Gary Lineker in an interview on 15 July.
When asked if he would implement one, Burnham said: “I don’t want to come in and create new divisions and pitch people against one another. I don’t want to rule things out right now. I do believe we need a greater sense of fairness, and people feeling that things are being done in the right way and a fair way.”
He added: “Decisions to be taken in time are going to be difficult, I’m not going to shy away from that. We are going to have to work quite hard to make sure we can pay our and at some point that might be having to ask for a little more.”
Although the prospect of increased taxes can be worrying, don’t plan your finances based on rumours, rather than officially announced policies.
Sarah Coles, head of personal finance at AJ Bell, said: "When faced with the threat of higher taxes, people will always want to take steps to protect themselves. We know from previous years just how much damage people can do to their finances if they feel forced into panicked decisions."
