Chancellor John Healey delivers his first Budget on 28 October. In this article, our legal experts cover six key issues worth watching closely across tax and business.

1. Defence spending

Few chancellors arrive at the despatch box with as much personal stake in the defence budget as John Healey. He resigned as Defence Secretary in June 2026, publicly accusing the Treasury of being "unwilling to commit the resources that the nation needs to defend the country at this time of rising threats." Now he's holding the purse strings and facing the same pressure he once applied. He's already ruled out a commitment to 3% of GDP at this Budget, kicking that decision to a future Spending Review. 

2. Devolution and regional funding

Devolution looks set to be one of the Budget's headline acts. The government's expected to announce a "roadmap for fiscal devolution", with Integrated Settlements – multi-year, single funding pots replacing fragmented central grants – worth £14.8bn across 2026–27 to 2029–30. Five more Mayoral Strategic Authorities are set to join the expanded framework, taking the total to seven.

The longer-term picture is arguably more significant. From April 2027, metro mayors would retain a share of business rates; from April 2028, a proportion of income tax revenues. The government has also committed to establishing strategic authorities across all English regions by the end of 2028.

3. VAT and online marketplaces

The Chancellor is said to be ready to make online marketplaces, Amazon, eBay, Temu and others, directly responsible for collecting VAT on behalf of every seller using their platforms. The measure's expected to raise around £1bn and targets a persistent problem: foreign retailers setting up UK shell companies to sidestep VAT obligations. Marketplaces have been required to collect VAT from overseas sellers since 2021, but compliance has remained patchy.

Worth noting: an earlier proposal for a warehouse tax has been dropped after significant industry pushback. Under current rules, warehouse-type properties used by online giants already pay a 33% higher business rates premium than small high street shops – an anomaly that may yet feature among the broader retail policy discussions.

4. Banking and energy firm taxes

Whether Healey goes down this road of taxing the banking and energy sectors (and how far) will be one of the Budget's more telling signals about the government's relationship with business. One possibility is increasing the surcharge on bank profits north of £100m to 8%, from 3%.

Reports also suggest the Chancellor is weighing potential windfall taxes on banks and/or energy companies to help plug a fiscal shortfall. But industry bodies have flagged the risks: deterring investment, prompting corporate restructuring, changes in international footprints, and raising questions about the UK's long-term competitiveness as a place to do business.

5. Employment tax and youth incentives

At the Labour Party Conference in September, Healey put it plainly: "the best thing we can offer young people is a job, not benefits." The Budget's expected to follow through, with measures reportedly under consideration including reduced income tax or National Insurance contributions for those entering work for the first time, alongside support for pre-apprenticeship routes.

For employers, particularly those in sectors battling skills shortages, the detail will matter. These proposals connect to a wider government effort to address the NEET (not in education, employment or training) crisis, and could reshape hiring incentives in meaningful ways. Watch for how the government balances cost to the Treasury with genuine behavioural incentive.

6. Capital gains and inheritance tax

Reports suggest Healey's pushed back against calls from senior Labour figures to align capital gains tax with income tax rates – a move that could've pushed CGT from its current 18–24% up to 45% for the highest earners. But a smaller, more targeted increase hasn't been ruled out. On inheritance tax, Prime Minister Burnham's been clear that wealthier estates should pay more. With reforms in relation to pensions already in motion for April 2027, there's speculation the Chancellor could go further: reforming, consolidating, or even abolishing IHT in its current form. Property wealth may be in his sights too: the threshold for the planned annual charge on high-value homes could be lowered ahead of its 2028 introduction, while agricultural and business property reliefs (already curtailed in April 2026) may face further tightening. 

Disclaimer

This blog post is based on pre-Budget reporting, publicly available industry analysis and commentary circulating ahead of the Autumn Budget. The views and predictions set out here reflect information available at the time of writing and should not be relied upon as legal or financial advice. While we have drawn on reporting from reputable sources, pre-Budget analysis is inherently speculative in nature. Predictions may change, and the measures ultimately announced may differ materially from those anticipated. A full analysis of the confirmed Budget measures will follow publication. Nothing in this post constitutes legal advice, and readers should seek independent professional advice tailored to their specific circumstances before taking any action in reliance on this content.