Will taxes rise in the Burnham government's first Autumn Budget?
New prime minister Andy Burnham said he will stick to Labour’s manifesto commitment to not raise income tax, national insurance, or VAT. But what other taxes could new chancellor John Healey target?
Andy Burnham’s new government will set out its fiscal plan for the UK on 28 October at chancellor John Healey’s first Autumn Budget.
While the new prime minister has announced several new policies to help with the cost of living, like a £2 cap on bus fares and the removal of VAT from electricity bills, few concrete fiscal plans have been set out.
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.
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Labour’s manifesto explicitly stated that the government will not raise any of the ‘big three’ taxes – income tax, national insurance contributions, or VAT.
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.
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.
Will investments be taxed more in the Budget?
The primary way investments are taxed in the UK is through capital gains tax. 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 allowance.
While Burnham has not made any public statements about whether he will change how the tax works, close allies like former Labour leader Lord Kinnock have urged him to look at it.
Burnham’s defence secretary Wes Streeting has also previously called for reform, arguing capital gains tax rates should be brought in line with income tax rates.
If that were to happen it would mean a basic rate taxpayer would pay 20% on their capital gains, a higher rate payer 40%, and an additional rate payer 45%.
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’, increasing the amount of council tax expensive homes will pay from April 2028 onwards.
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. The more expensive your home is, the more you pay.
In the weeks between Burnham returning to Westminster and being appointed prime minister, leaks suggested his policy team were working on proposals to expand this tax.
The Mail on Sunday reported Burnham could reduce the threshold for the ‘mansion tax’ to £1.5 million. This would make an additional 150,000 homes liable for the tax, according to research by Tax Policy Associates.
No official statements have been made by Burnham or the Treasury about whether property taxes will be increased in the next Budget.
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, it is best not to get carried away and plan your finances on the basis of rumoured 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."
