Andy Burnham, as he prepares for premiership alongside the newly appointed Labour Chancellor John Healey, might focus on revising capital gains tax or inheritance tax in his first Budget. Financial experts have expressed concerns that such changes could disproportionately affect state pensioners, among others.
Michele Tieghi, a financial expert from investing guidance platform Psyfi Money, commented: “It’s definitely plausible that tax rises could be announced in the 2026 Autumn Budget in October, with some taxes being more likely targets than others.”
Labour has previously committed not to increase income tax, National Insurance, or VAT, and Mr Tieghi believes the new government is likely to maintain this position. However, he suggested the government may use alternative methods to increase revenue, resulting in higher tax liabilities for many individuals.
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He explained, “Freezing tax thresholds, personal allowances, and reducing allowances for higher earners could lead to fiscal drag becoming a significant source of additional revenue.”
Mr Tieghi also noted discussions around taxing savings, though he acknowledged such measures would be unpopular and thus may not be Labour’s primary choice. Potential changes could involve reducing the personal savings allowance, lowering starting rates for savings, and increasing tax on investment income-actions that would most affect pensioners, middle-income families, and cautious savers.
More immediate possibilities include alterations to capital gains and inheritance taxes. These have often been highlighted by experts as pragmatic strategies for raising government revenue.
Possible adjustments to capital gains tax could include reducing exemptions, increasing rates, restricting Business Asset Disposal Relief, and modifying entrepreneur reliefs.
Similarly, the government might tighten trust regulations, adjust gifting exemptions, reduce available reliefs, and enhance compliance measures related to inheritance tax.
Currently, most estates are not liable for inheritance tax. Individuals can transfer up to £325,000 in assets tax-free, with an additional £175,000 allowance when passing on a main residence to a direct descendant. Unused allowances can be passed on to a spouse or civil partner, potentially allowing the transfer of up to £1 million in assets tax-free upon the death of the second partner.
A Treasury spokesperson stated: “The Chancellor is fully focused on his priorities, to boost business, help with the cost of living and support people in every postcode. As has always been the case, the Chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”