Why Healey's 28 October Budget Confirms a Business Rates Cut but Not Bank Changes

The UK's Autumn Budget is set for Wednesday 28 October 2026, and Chancellor John Healey will deliver it. CIPP reports that the date had been announced by 31 July 2026, and that the Budget will come with a fiscal and economic forecast. It is Healey's first Budget. He has said it will be built on fiscal discipline and will give businesses and families some of the stability they need to plan for the future.

Some measures are already settled and others are only under discussion. The business rates cut is settled, while the bank, energy and capital gains changes are not yet announced. Grant Thornton and Saxo both list the levers being considered. Burges Salmon says that adjustments to business rates or new sector-specific levies could materially alter cost bases for businesses, and that a tightening of capital gains provisions would have immediate consequences for transaction planning. Saxo ties fiscal headroom to a sharp spike in bond yields.

What Is Already Settled Before 28 October

Manifesto pledges rule out increases to several tax rates, according to Grant Thornton and Burges Salmon. Andy Burnham has confirmed the government will honour the 2024 manifesto pledge not to raise income tax rates, employee National Insurance or VAT, Grant Thornton reports. Income tax thresholds are frozen until April 2031. Grant Thornton also lists the headline corporation tax rate, capped at 25% for the Parliament, with full expensing kept as a manifesto position.

Grant Thornton reports that new rates for property, savings and dividend income took effect in April 2026, and that a High Value Council Tax Surcharge is due from April 2028 at the £2 million threshold. The same review says Healey has reportedly told the Financial Times he will stick to his manifesto tax pledges, including corporation tax.

Business Rates: Pub Cut Set, Wider Reform Still Open

On 23 July the government announced a 20% cut to business rates for pubs, social clubs and live music venues in England, according to Grant Thornton. The cut starts in 2027/28, which is April 2027, and builds on a 15% relief for 2026/27. Hotels, restaurants, cafés and cinemas are not currently included. Healey has called it a “downpayment”, with a wider high-street strategy due to follow later in the year.

Burges Salmon says eligibility details, including the size threshold above which live music venues would not benefit, are still awaited. Grant Thornton says the discount will not reach the very largest live music venues, though exactly where that line falls is still to be confirmed.

The government has said business rates will be revisited more widely at the Budget. Burges Salmon lists possible measures, none confirmed: changes to the threshold or taper of Small Business Rates Relief, a further Retail, Hospitality and Leisure multiplier reduction, and more transitional relief for the April 2026 revaluations. It also says a move from a slab system to a slice system has been mooted, and it is not clear whether it will proceed. Grant Thornton says the pub cut sits on top of a real-terms freeze already in place for 2027/28 and 2028/29.

Sector Levies Are Named but Nothing Is Announced

Saxo describes banks as a potential target for a surcharge or windfall-style levy when broad tax rises are politically constrained. It says a surcharge could be offset by lower capital requirements, which would encourage lending. Grant Thornton lists a bank surcharge among areas to watch and says the TUC has renewed calls for higher taxation of the banking sector.

Saxo says the North Sea energy profits levy is currently 38%. It is due to be replaced in 2030 by a targeted windfall rate of 35% that applies only when Brent is above $90. The main risk for North Sea producers, in Saxo's view, is an extension or tightening of the regime, though investment allowances could soften the impact.

Saxo names higher gambling duties, mainly on land-based machine gaming, and a possible digital levy for technology. Utilities face regulatory and windfall-tax risks, and Saxo says airlines face clear targeted-tax risks.

Grant Thornton reports suggestions that online marketplaces could be made responsible for VAT on sales by UK businesses, not only by overseas sellers. The same review says such a change could be used to fund business rates reform. Both points are listed as reported, not confirmed.

Capital Gains, Property and Investor Exposure

The main capital gains tax rate is 24%, up from 20% in October 2024, according to Grant Thornton. The Financial Times reported on 13 October, citing anonymous Treasury sources, that equalising capital gains tax with income tax has been ruled out. The Times reported on 19 October that the Chancellor has ruled out any capital gains tax increase. Grant Thornton notes there is no official statement on either report. Saxo, by contrast, says a moderate increase looks more plausible than full alignment, which it calls a major downside surprise for UK shares.

Saxo says options reportedly under discussion include higher taxes on property gains, landlord income and high-value homes, and that REITs are also exposed. It says housebuilders could benefit from transaction-tax reform but would suffer if high-value housing or landlord demand were targeted. Grant Thornton reports that Burnham has said the Budget will not abolish stamp taxes or council tax. It also reports that a cut in the high-value council tax threshold, from £2 million to £1.5 million, was reported, but that FT reporting says it has been ruled out.

Saxo says asset managers, investment platforms and life insurers are exposed to possible changes in capital gains tax, ISAs and pensions. It says there have not been the same rumours about pension tax relief this year, and lists possible measures including restrictions on relief, employer contributions or the tax-free lump sum.

Grant Thornton reports that the 2024 changes to inheritance tax reliefs for farmers and family businesses are under scrutiny. It says the Prime Minister has reportedly been willing to “look again” at the 2024 curtailment of agricultural property relief, and that it is unclear whether business property relief is included. Healey may also consider incentives for people who sell businesses to reinvest in the UK, according to FT reporting cited by Grant Thornton.

Devolved Business Rates and Pension Surplus Tax

Burges Salmon expects English metro mayors to receive a share of income tax revenue from April 2028, and to keep a share of business rates from April 2027. It says mayors may also gain powers to offer locally funded tax rebates. The income tax share for each area has yet to be confirmed, and the scope and conditions of the rebates remain unpublished. Andy Burnham and John Healey made statements to Parliament on 30 July 2026 supporting these plans.

Burges Salmon reports that the tax rate on payments from surplus to pension scheme sponsoring employers fell from 35% to 25% from 6 April 2024. Pension scheme reforms labelled PSA26 are due from April 2027. The Department for Work and Pensions said in May 2025 that it was continuing to consider the surplus extraction tax regime. The firm says there is scope for further movement on surplus taxation in this Budget.

Outside the Budget, Burges Salmon says a trade union right of access to workplaces and an extension of anti-harassment protections are due on 30 October 2026 under the Employment Rights Act 2025. It does not expect new employment law measures in the Budget.

Fiscal Headroom and Gilt Exposure

Grant Thornton cites recent estimates of fiscal headroom of about £12 billion, down from about £24 billion at the Spring Forecast 2026. It says the IFS suggests headroom could be as high as £20 billion, with high uncertainty. Saxo says a sharp spike in bond yields has eroded the Chancellor's headroom, and that he is seeking to rebuild that buffer.

Burges Salmon says the Middle East conflict has raised energy costs and removed interest rate cuts for the foreseeable future, and that defence and social care spending will add fiscal pressure. It cites GDP growth of 1.3% for 2026, inflation of around 3.3%, and public sector net debt above £2.9 trillion, or 93.8% of GDP.

The cost of the choices is also large. Grant Thornton cites an IFS estimate that resuming income tax threshold indexation from April 2027 would cost about £8.4 billion a year, and says any such move would likely need funding from tax rises elsewhere. Grant Thornton also gives a tax gap target of an extra £10 billion a year by 2029/30.

Saxo expects a placeholder Budget, with major reforms likely left for the next Labour manifesto.