Autumn Budget 2026 predictions: the tax changes to watch

A tighter fiscal position than it looks

Burnham has pitched a change in direction, with devolution at its heart. A roadmap to move money and power out of Westminster and into the regions, and to kickstart growth in every postcode. The question ahead of the Budget is whether tax rises will be needed to fund these ambitions. 

Speaking in Coventry on 7 September, Healey put fiscal discipline first, arguing that fiscal credibility is indivisible from growth. He repeated that message at Labour's conference in Liverpool on 28 September, committing to meet the fiscal rules, but gave no signals on tax. In this respect, there has been little departure from the approach taken by his predecessor. At Spring Forecast 2026, Rachel Reeves increased fiscal headroom to around £24 billion. How much of that remains is now unclear. Rising gilt yields, tension in the Middle East, higher defence commitments and cost-of-living measures have all eroded that buffer. Estimates of what is left vary. Most recent estimates are around £12 billion, roughly half the level forecast by the Office for Budget Responsibility (OBR) in March, while the Institute for Fiscal Studies (IFS) has noted that it could plausibly be as high as £20 billion, though the degree of uncertainty over that estimate is very high. The outlook could improve before the Budget, but Healey's commitment to a "buffer against uncertainty" and an expected cost-of-living package points to further steps to rebuild fiscal headroom.

Most expect tax rises alongside spending control. As with the previous two Budgets, the chancellor's options are narrow. Burnham has confirmed the government will honour Labour's 2024 manifesto commitment not to increase the rates of income tax, employee National Insurance or VAT. Together those three account for almost 60% of total tax receipts, so the government's largest revenue-raising levers are effectively off the table. 

Why this Budget is harder to predict

The window for speculation is shorter than in previous years. At Prime Minister's Questions on 2 September, the Prime Minister indicated that an earlier Budget date had been chosen deliberately to reduce the period of uncertainty. 

There has also been little leaking of potential tax policy measures to date. That said, as we draw closer to the Budget, media briefing has reportedly begun to pick up certain measures that might have been discounted, particularly around capital gains tax and the “mansion tax”. Though if the wider discipline holds, with no indication being provided on which tax-raising measures remain on the table, this Budget could contain several genuinely unexpected announcements and become one of the least predictable fiscal events in recent years.

What could the UK Budget mean for business?

Business rates and the high street

On 23 July 2026, the government confirmed a 20% cut to business rates for pubs, social clubs, and live music venues in England, taking effect from April 2027. This builds on the 15% relief introduced for the current 2026/27 year and sits on top of a real-terms freeze already in place for 2027/28 and 2028/29. Healey has called it a “downpayment,” with a wider high street strategy due to follow later in the year.

The discount will not reach the very largest live music venues, though exactly where that line falls is still to be confirmed. Hotels, restaurants, cafes, and cinemas are not currently included. The government has promised wider business rates reform at the Budget, including changes to Small Business Rates Relief. It’s being reported that any further reform could be funded by making online marketplaces responsible for accounting for VAT on goods sold by UK businesses, not just overseas sellers.  While not a rate rising measure it could be expected to bring in substantial additional revenue through cutting down on non-compliance and closing the tax gap. 

Corporation tax and sector levies

Corporation tax looks comparatively stable. Labour committed in its manifesto to capping the headline rate at 25% for the Parliament, and to keeping investment incentives such as permanent full expensing and the annual investment allowance. Healey has reportedly told the Financial Times that he will stick to the manifesto pledges on tax, including corporation tax.

That does not rule out sector-specific change. Some stakeholders, including the Trade Union Congress (TUC), have renewed calls for higher taxation of the banking sector in light of sustained profitability. The bank surcharge or other industry-specific levies, including on the gambling sector, remain areas to watch.

Closing the tax gap

Reducing the tax gap is a priority inherited from the Starmer government, with plans to raise an additional £10 billion a year by 2029/30. HMRC has received significant investment as part of a wider transformation programme, accelerating its use of digital tools, real‑time data, and targeted interventions.

James Murray MP returns as the minister responsible for HMRC, a position he held when the transformation programme was first launched, so a change in direction looks unlikely. Strong tax governance frameworks are expected to remain as essential for businesses managing risk and meeting evolving compliance expectations.

Consultations to watch

Several early-stage consultations show where the government is considering reform: 

• Simplifying withholding tax relief on cross-border interest payments
• Reviewing the distributions framework, which could affect how share buybacks, exits and demergers are taxed
• Following the Supreme Court's Orsted judgment, whether current legislation provides sufficient certainty over the treatment of predevelopment costs, and the associated commercial impact.

What could the UK Budget mean for individuals and entrepreneurs? 

A historic theme in Burnham's commentary has been that the UK taxes work more heavily than wealth and that this imbalance should be addressed. It is difficult to draw firm conclusions from past remarks, and Burnham has more recently sought to reassure audiences that he does not intend to tax the wealthy out of the UK. But that long-standing view, alongside the manifesto pledges on earnings and consumption, suggests the taxation of assets and land could feature.

It would not be a sharp departure. Under Reeves, several Budget measures have already focused on these areas, including new tax rates for property, savings and dividend income which took effect from April 2026.

Property and land

Burnham has not expressly proposed a general wealth tax, but he has long advocated for the introduction of a Land Value Tax, which would impose an annual tax on the value of land. The idea attracts support from economists and policymakers across the political spectrum, particularly where it could form part of a wider overhaul of property taxation.

While the introduction of a Land Value Tax looks unlikely for this Budget, as he has recently indicated that the Budget will not abolish stamp taxes or council tax, he stopped short of ruling out more incremental reform. Property taxation therefore remains an area to watch for this Budget and beyond.

Recent media reports had suggested the government may be considering lowering the threshold for the High Value Council Tax Surcharge, often referred to as the mansion tax, from £2 million to £1.5 million. The surcharge is due to apply from April 2028. While the government has made no formal statement, the FT has reported that the change has now been ruled out.

Capital gains tax

Burnham's argument on the taxation of work and wealth, plus calls from those within the Labour party to align the rates of capital gains tax and income tax, has led to speculation in the run up to the Budget that further changes to capital taxation are being considered.

On 13 October the FT reported, citing anonymous Treasury sources, that equalising the rates has been ruled out. While many commentators noted this left room for a smaller increase, The Times has since led with the story (19 October) that the Chancellor has ruled out any CGT increase. It should be noted that there has been no official statement on either announcement and even if rate increases may have been ruled out, this potentially would still leave open the possibility of other reforms to CGT. 

The main rate of capital gains tax was last increased from 20% to 24% in October 2024. The Chancellor has been faced with the challenge that any further reforms would need to be balanced against their potential to generate additional revenue. Some modelling, including HMRC’s, suggests that a straightforward increase above 24% could prove counterproductive, alongside consideration of the impact on investment and entrepreneurship. 

This may explain why attention is turning to other pro-growth options, with suggestions in the above-mentioned FT article that Healey may also be looking at measures to encourage people who sell their business to reinvest in the UK. 

Inheritance tax reliefs

The 2024 changes to inheritance tax reliefs for farmers and family businesses remain under scrutiny. The Prime Minister has been reported as willing to “look again” at the curtailment of agricultural property relief announced in 2024. Whether that leads to further change, or extends to business property relief, is unclear.

Income tax thresholds

The manifesto commitment covers income tax rates, but not thresholds. Thresholds are frozen until April 2031, so fiscal drag will keep raising revenue as rising earnings pull more taxpayers into higher bands. It has become a favoured tool of successive Chancellors because it raises money without increasing headline tax rates.

After several years of freezes, the policy is attracting growing political scrutiny. Burnham acknowledged concerns about the personal allowance freeze during the Makerfield campaign. Restoring inflation-linked uprating would be costly: the Institute for Fiscal Studies has estimated that resuming indexation from April 2027 would reduce revenues by around £8.4 billion per year under current inflation forecasts. Any such measure would likely need to be funded by tax rises elsewhere.

What to do before 28 October

Rather than waiting for Budget Day, now is a good time to review your position and understand the range of outcomes so you are ready to act once the announcements are made.

Our team will be analysing the announcements as they land on 28 October, with a more detailed breakdown in our Autumn Budget webinar on 3 November.

For guidance on how potential reform could affect you or your business, speak to your Grant Thornton tax advisor or contact our tax team.

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