The Budget roadmap proposes income-tax sharing from 2028 and full local retention of business rates by decade-end. Healey also announces £100 energy payments for 20 million households in England’s council-tax bands A–D.
UK chancellor John Healey announced plans on 28 October to give mayors 20% of business-rate revenues from 2027, the Guardian said. He also proposed tax breaks for startup founders and significant early investors, alongside a British Business Bank plan to expand investment in funds for female-led businesses. The local-revenue roadmap proposes sharing income-tax receipts with mayors from 2028 and retaining all business-rate revenues locally by the end of the decade.
Business rates are taxes on the occupation of non-domestic property. England’s system, introduced on 1 April 2013, allowed councils to keep up to half the receipts, with half going to central government and returning through grants. Further payments adjust councils’ retained shares according to their financial positions. Before that system, council-collected receipts went into a national pool for redistribution.
Healey announced plans for “Founders’ Relief”, a capital-gains-tax break for founders and significant early investors in UK startups, Tech.eu said. Capital-gains tax applies to profits from selling assets. Healey said the proposed relief would recognise founders’ risk and encourage successful entrepreneurs to stay in Britain and invest again.
Healey announced a proposed 10% tax rate on founders’ lifetime gains up to £10 million.
He also proposed raising the trading allowance—the amount people can earn tax-free from a new venture—from £1,000 to £3,000. A separate young entrepreneurs allowance would cover a year of living costs while young founders turn their ideas into businesses. These are announced proposals, rather than tax benefits already in force.
The government plans a 26 November start for suspensions covering 101 food and agricultural products, including garlic, gherkins and plant-based milk.
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The Budget includes a plan for the British Business Bank to double its investment in funds for female-led businesses to £200 million. The government also announced a programme to help female founders expand their businesses. The £200 million is a planned investment total, not money already invested.
Alongside the Budget, the Office for Budget Responsibility, the UK’s independent fiscal forecaster, cut its 2027 growth forecast from 1.6% to 1% and raised its 2026 forecast from 1.1% to 1.2%. It said the Middle East conflict and higher energy prices were weighing on growth, household incomes and public finances. Its growth forecasts measure gross domestic product, the value of national output.
| Year | Budget forecast | March forecast |
|---|---|---|
| 2026 | 1.2% | 1.1% |
| 2027 | 1.0% | 1.6% |
| 2028 | 1.6% | 1.6% |
| 2029 | 1.8% | 1.5% |
| 2030 | 1.7% | 1.5% |
| 2031 | 1.6% | — |
The forecaster expects inflation of 3.5% in 2026, up from the 2% it forecast in March. It also expects disposable income per person, adjusted for rising prices, to fall in the short term before increasing modestly. On its projections, that income would be only about 2% above pre-pandemic levels by the start of the 2030s. The OBR described the economic outlook as highly uncertain.
Healey said fiscal discipline was his first priority and that he would meet two fiscal rules. Tax receipts must cover day-to-day spending, and government debt must fall as a share of national output in the forecast’s third year. The debt measure used for that rule is public sector net financial liabilities, which takes account of financial assets as well as liabilities.
| Financial year | Borrowing as a share of national output |
|---|---|
| 2026–27 | 4.2% |
| 2027–28 | 3.4% |
| 2028–29 | 2.9% |
| 2029–30 | 2.1% |
| 2030–31 | 1.8% |
The OBR’s forecast leaves £15 billion of headroom against the main fiscal rule in 2029–30, down from the £23.6 billion left in spring 2026. Headroom is the margin available before a fiscal rule would be breached.
| Financial year | Headroom |
|---|---|
| 2029–30 | £15 billion |
| 2030–31 | £20 billion |
Healey announced new “good growth” funds for areas with mayors and similar funding for areas without them. Mayors would also be able to introduce overnight visitor levies to fund their areas. The revenue-sharing changes are a Budget roadmap, not enacted rules, and the proposed share of income-tax receipts remains unspecified.
The Budget allocates £285 million in 2027 to regional bodies and mayors in England for priorities such as housing, transport and high streets. The government will work with mayors to design a separate £1.5 billion borrowing facility for larger projects.
| Planned amount | Purpose |
|---|---|
| £150 million | Help mayoralties and local authorities prepare for new responsibilities. |
| £1.5 billion | Provide a borrowing facility. |
| £285 million initially in 2027 | Fund local leaders’ “good growth” priorities, potentially including housing, transport links and high-street regeneration. |
Separately, Healey announced an additional £20.4 billion for the state-controlled National Wealth Fund and the British Business Bank to support investment in growing companies. The figure is an announced funding increase for the two institutions, not a total of investments already completed.
Healey said 20 million households in England’s council-tax property bands A to D would receive a £100 energy payment directly into their bank accounts. He put its cost at £2.6 billion. The BBC’s guide to the household measures said the payment would be funded by extra tax on banks. Scotland, Wales and Northern Ireland would receive equivalent funding, with their administrations deciding whether to offer the same payment.
Healey also proposed removing gas standing charges for about 23 million homes in England, Scotland and Wales during 2027 or as soon as possible afterward. These fixed daily fees are paid regardless of gas use and average £108 a year. Their cost would instead move into the price per unit of gas.
The UK Treasury estimates that 60% of households would save an average of £45 a year, with lower users gaining most. Higher gas users, including some large low-income families, would pay more. The change would come after the projected rise in bills in January 2027.
Healey announced that a cut in value-added tax on electricity bills, introduced in October 2026 and previously due to end in April 2027, would run through July 2027. He also extended the 5p-per-litre fuel-duty cut on petrol and diesel through July 2027 instead of starting to phase it out in January 2027. Fuel duty will remain frozen for a 16th consecutive year.
Other announced energy measures include scrapping a levy intended to fund hydrogen and moving older renewable-energy projects onto fixed-price contracts. Healey also announced plans to remove import tariffs on more than 100 products, including baked beans, chocolate and gherkins, to reduce shop prices.
Healey withdrew the planned reduction in the annual tax-free cash Individual Savings Account, or Isa, limit from £20,000 to £12,000 for people under 65 from April 2027. He said the £20,000 limit would remain for people of all ages.
Healey announced a 3.9% rise in legal minimum-wage rates in April 2027. The state pension is also set to rise by 3.9%, in line with average wage growth.
| Pension | Weekly amount | Annual amount |
|---|---|---|
| Full new state pension, for people reaching pension age after April 2016 | £250.70 | £13,036.40, up £488 |
| Old basic state pension, for people reaching pension age before April 2016 | £192.10 | £9,989.20, up £374.40 |
Healey announced a Pension Tax Allowance intended to ensure that pensioners whose income does not exceed the full new state pension pay no income tax until at least 2030. He also announced a change to Carer’s Allowance: instead of losing the entire benefit when earnings exceed £204 a week after tax, unpaid carers would see it reduced gradually. That change is not due until 2030.
The Budget also announced an extension of parental pay to self-employed fathers and parents in same-sex couples. The proposal includes two weeks of paternity pay for self-employed fathers, who previously missed out.
The tax-free mileage allowance for work driving would be made permanent at 55p per mile for the first 10,000 miles, with the rate above that distance rising from 25p to 35p per mile.
Healey said the surcharge banks pay on their profits, on top of corporation tax, would rise from 3% to 6% for 15 months starting in January 2027. An earlier government had reduced it from 8% to 3%. He also said tax on income from property and savings would rise by two percentage points from April 2027. These are announced tax changes, not enacted rates.
Healey also announced changes to business-rates relief, gambling duties and tax collection. The relief threshold concerns a property’s rateable value, rather than a firm’s sales.
| Measure | Announced change |
|---|---|
| Small-business rates relief | Raise the threshold from £12,000 to £18,000 for retail, hospitality and leisure businesses; Healey said 70,000 smaller firms would receive a tax break. |
| Adult gaming centres and vape shops | Exclude them from business-rates relief. |
| Higher-stakes gambling machines | Raise machine games duty from 20% to 25%. |
| Online marketplace sellers | Target avoidance of value-added tax, charged on many goods and services. |
For local authorities, the first planned revenue-sharing step is the transfer of 20% of business-rate revenues to mayors in 2027. Income-tax sharing is proposed from 2028, before full local retention of business rates by the end of the decade.
The Budget preserves the £20,000 annual cash ISA allowance and proposes a 24% rate on savings and rental income for basic-rate taxpayers from April 2027.
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Under the announced Your First Home terms, eligible first-time buyers purchasing qualifying new-build homes in England can seek a 20% equity loan with a deposit from 2.5%. Applications are scheduled to open in February 2027.
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