Chancellor John Healey’s first Budget under Prime Minister Andy Burnham focused on easing household pressures amid global uncertainty. He cited trade tensions and the Iran war as factors driving up energy costs and interest rates, with debt interest payments set to rise by £14 billion this year.
After two Budgets raised more than £67 billion in taxes, the government’s £23 billion fiscal headroom, calculated by the OBR in March, has been eroded by the changing economic outlook. The OBR now expects inflation to peak at 3.75 per cent in early 2027 and average 3.4 per cent next year, up from its earlier 2 per cent forecast, adding around £11 billion to annual borrowing.
Healey has reduced fiscal headroom for 2029/30 to £15 billion while raising taxes by nearly £7 billion a year by 2031/32. The main measures include closing the HMRC tax gap and reducing the writing down allowance.
Key measures include raising tax rates on savings and property income by two percentage points to 24%, 44%, and 49% starting in 2027/28, while main personal income tax and National Insurance thresholds remain frozen until 2030/31 and 2031 respectively. To ease living costs, the government introduced a temporary three-year pension tax allowance for pensioners on the new state pension, a one-off £100 energy payment for households in council tax bands A to D, and a 3.9% increase to both the National Living Wage (to £13.21/hr) and state pensions. Support for enterprise and savings features an abandoned cut to under-65 cash ISA limits, the tripling of the trading allowance to £3,000, and a new Founders’ Relief offering a 10% Capital Gains Tax rate on up to £10 million of lifetime gains, balanced by a cut to the Business Asset Disposal Relief lifetime limit to £500,000 and a reduction in the capital allowance writing down rate to 12%.
Asian Voice spoke to several experts to examine the key measures in this year’s Autumn Budget, weighing their potential benefits and drawbacks.
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Deepak Lalwani OBE, Director – Investments at London-based Lalcap Ltd said, “The Budget is broadly neutral, with mixed measures. Energy support, fuel duty freezes, minimum wage increases and temporary tariff reductions on over 100 food and drink products aim to ease cost-of-living pressures. Additional social housing and first-time buyer support address affordability, while business-rate relief helps struggling pubs, retailers and hospitality businesses. The 10% Capital Gains Tax rate on up to £10 million of qualifying lifetime gains for founders of innovative, high-growth companies encourages entrepreneurship. However, tax increases and operating costs may discourage investment and recruitment. ISA changes balance cash savings protection with investment and homeownership incentives. The Pensions Tax Allowance is welcome. Remaining unresolved is the urgent challenge in boosting growth, particularly as the OBR forecasts 1% growth in 2027, down from 1.6%. High public debt and rising interest costs constrain spending, while NHS waiting lists, productivity and public-service pressures persist.”
Overall: Short-Term Relief, but Long-Term Challenges.
My rating: 6/10
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Jayesh (Jay) Doshi, Chartered Tax Adviser said, “Income from savings and property: From 6 April 2027, the tax rates on these types of income will increase – the basic, higher and additional rates will become 24%, 44% and 49% respectively. Small businesses or side hustles: the trading allowance will increase from £1,000 to £3,000 from April 2027. A new tax allowance from April 2027 to prevent pensioners whose total income does not exceed the full new State Pension from having to pay small amounts of income tax. Capital Gains Tax (CGT): The lifetime limit for Business Asset Disposal Relief will be reduced from £1 million to £500,000 for disposals from 6 April 2027. A new Founders' Relief will be introduced from the same date, which will provide a 10% CGT rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies.”
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Subhash Thakrar OBE B com FCA FRSA said, “This was the second Healey budget. The first was back in 1975 when Dennis Healey delivered his budget at a time of severe economic turbulence when in 1976, inflation was 14% and interest rate was 15%. We even had to resort to an IMF loan of £2.3bn! This was famously known as going to the IMF with a cap in hand. In comparison, John Healey is faced with similar but less severe challenges. The 2026 budget passed with no bond market turbulence. He has claimed that this budget is making fundamental changes but most commentators have viewed it as steady as it goes to the opposition leader’s reaction as ‘is that it’. There are around 80 tiny changes, all with very little impact. This has also defined how Andy Burnham has spent his first 100 days- with small comments and adjustments whilst pushing the can on all major issues. The payout of £100 towards energy cost is hardly going to make any positive impact as the anticipated increases on the gas prices will far outweigh this. One would have liked to see something major to boost growth in the economy as only boosting growth will help a major change to our economy. Growth is much needed. There could have been tax benefits for investing and also help small businesses on energy costs. Our energy costs are significantly more than France or Spain. Our electricity prices are around 18% higher than the EU average. Our gas prices are somewhat lower but overall we pay more in the UK. There has been an increase on the first year capital allowance from 40% to 50% but the writing down allowance has come down from 14% to 12%. This is just tinkering on the edges rather than a boost to industry! Many businessmen will feel that the Chancellor has just played a game with them.
“John Healey has come up with a new CGT relief called Founders relief allowing qualifying businesses and early investors with a reduced 10% CGT for up to £10m of lifetime gains. However, the criteria to qualify is so stringent that hardly any businesses are expected to benefit. One tax expert commented that hardly 400 businesses in the whole country will benefit each year . This will turn out to be a damp squib! Why announce changes when the impact will not be there. Moreover, the more important and popular entrepreneur’s relief or now called Business Asset Disposal Relief has been knocked down from £1m to £500,000.
“The most painful announcement was the attack on property and savings income. Here he has announced a 2% increase across all bands raising the basic rate to 24% and higher rate to 44% and additional rate to 49%. In a country with a severe housing shortage, this is yet another attack on landlords on top of so many recent changes from the Renter’s Act and more and more demands and charges from local authorities. We may have reached the turning point where many landlords will withdraw from the market pushing the housing crises even higher.
“A couple of positives were welcome. The top CGT rate has not been increased when it was widely expected to. The cash ISA limit for annual saving will now remain at £20,000 instead being reduced to £12,000.
“The bigger issues of creating growth or reduction in government spending to reduce the government borrowing have just been passed over. These were missed opportunities. The government is just kicking the can to some future date whilst remarking that it will start dealing with these. Was this not the best time to address these with some concrete steps? Also, there was nothing for the 16-24 year Neet generation although in fairness the government is waiting for the Milburn report on this. This group of around 1 million young people are suffering with the highest level of unemployment in the country. For most people the budget was a missed opportunity and hardly eventful!”
