Healey's first budget promises a higher minimum wage, zero business rates for 70,000 firms and new tax tools for HMRC.
Chancellor John Healey delivered his inaugural Budget for the current administration, laying out a series of fiscal adjustments aimed at supporting households while tightening revenue streams. The package retains the £20,000 cash ISA allowance, introduces a Starter ISA aimed at first-time investors, and lifts the National Living Wage by 3.9%, pushing the hourly rate above £13 for the first time.
Simultaneously, the government announced a temporary 3 % bank levy that will run for 15 months, a figure notably lower than the 5-8 % speculation circulating before the statement.
Tax reliefs and new revenue measures
The Budget expands the Small Business Rate Relief threshold from £12,000 to £18,000, effectively removing business-rate liabilities for an additional 70,000 retail, hospitality and leisure premises.
Healey also pledged a two-year real-terms freeze on rates for qualifying firms, preserving their cash flow amid rising energy costs. In the gambling sector, duty on high-stakes machine games climbs to 25 %, with the proceeds earmarked for high-street revitalisation schemes.
To boost compliance, the Treasury granted HM Revenue & Customs enhanced powers to seize unpaid taxes directly from bank accounts of those who can afford to pay, coupled with additional funding to close loopholes. A revision to capital-gains treatment reduces the Business Asset Disposal Relief threshold to £500,000, though three-quarters of claimants will see no change.
Energy-price relief and cost-of-living support
Addressing the inflationary pressure caused by global conflicts, Healey unveiled a £2.6 billion scheme that will place a £100 credit directly into the accounts of 20 million households in council-tax bands A-D. The payment, described by the Chancellor as a “breathing space” measure, will be matched in devolved administrations across Scotland, Wales and Northern Ireland. In parallel, the VAT reduction on electricity has been extended to July, trimming the annual price-cap by £50, while the government announced the removal of fixed gas standing charges from next year, saving households an average of over £100 annually.
Looking ahead, the Chancellor affirmed a commitment to eliminate the current budget deficit within three years, targeting a fiscal headroom of £15 billion by 2029-30. Borrowing is projected to fall from 4.2 % of GDP this year to 1.8 % by 2030-31, and overall debt is expected to dip from 83.2 % to 81.7 % of GDP by 2031-32. These figures rely on the combined effect of the new tax measures and the cost-of-living packages announced today.
Future-focused initiatives
Healey also signalled a strategic push into emerging technologies, unveiling a British Data Centre Covenant that will impose strict criteria on new facilities to ensure national security and data sovereignty. An extra £0.5 billion will be allocated to artificial-intelligence safety, positioning the UK as a global leader in AI security. The Chancellor’s remarks were not without missteps; a brief slip when referencing the Energy Secretary’s stance on the Rosebank North Sea oilfield prompted audible jeers from opposition benches, underscoring the political sensitivity surrounding energy policy.
Overall, the 2026 Budget blends targeted relief for consumers, decisive tax reforms, and a forward-looking agenda centred on technology and fiscal prudence. Whether the measures will translate into sustained growth remains a question for Parliament and the markets, but the blueprint offers a clear roadmap for the next three years of British public finance.
