Healey weighs tax options as first Budget approaches

John Healey, the Chancellor of the Exchequer, is preparing his first Budget, which he is due to announce on 28 October. Reuters Healey has promised that the Budget will keep to Labour's commitment not to raise income tax, National Insurance or VAT. BBC News Labour's 2024 election manifesto, the party's policy programme for that campaign, made the same pledge on the rates of those three taxes.

The room for manoeuvre is smaller than it was. Economists think the government's fiscal headroom, the buffer it keeps against its own borrowing rules, may have halved over the last six months, from around £24bn to as little as £11bn. BBC News A Reuters poll indicated that Healey should rebuild the headroom to about £15-16 billion ($20-21 billion). Reuters

Government sources have ruled out increasing taxes on capital gains, the profits made from selling assets such as shares, and extending the mansion tax, the levy on high-value homes, in the Budget.

Several other options are being discussed. Tax Policy Associates estimates that raising the bank corporation tax surcharge, a levy on banks' profits, from 3% to 5.5% could raise an additional £1bn to £2bn a year. BBC News

Gordon Brown, a former prime minister, has called on Healey to raise tax on electronic gaming machines in betting shops and adult gaming centres. The Social Market Foundation, a think tank, estimates that doubling the tax on Category B machines from 20% to 40% could raise between £275m and £460m.

Reports suggest the Chancellor is preparing to make large online marketplaces, including Amazon, eBay and Temu, responsible for collecting tax owed by retailers selling on their platforms. The Treasury estimates a VAT tax gap of around £12bn a year, the difference between the VAT that should be paid and the amount collected.

Healey will set out how the government plans to raise or lower taxes when he presents the Budget. BBC News