What is the Budget and what could be in it?

Image source, Dan Kitwood/Getty Images Published 28 September 2026 Updated 3 hours ago Chancellor John Healey will set out Labour's tax and spending plans when he delivers his first Budget on 28 October.

He has refused to rule out tax increases after acknowledging government borrowing costs are at "historic highs".

Before the 2024 general election, Labour promised not to increase three big revenue earners for the government: income tax, National Insurance and VAT.

In his statement, delivered to MPs in the House of Commons, Healey will set out how the government plans to raise or lower taxes.

Alongside the Budget, the Treasury will publish details about the measures and their costs.

The independent Office for Budget Responsibility (OBR), which monitors government spending, will also publish an assessment of the health of the UK economy and a forecast of what it thinks will happen in the future.

The run-up to the Budget typically generates speculation about what might be in it, which the government is trying to keep to a minimum this year.

Healey and Prime Minister Andy Burnham face a difficult balancing act, trying to offer more support to households and meet commitments on defence spending, while also sticking to Labour's manifesto commitments on tax and the government's self-imposed fiscal rules.

The previous chancellor, Rachel Reeves, set out two main rules, which the new leadership has vowed to follow. These are:

Not to borrow to fund day-to-day public spending by the end of this parliament

To get government debt falling as a share of national income by the end of this parliament

In March, the OBR calculated that the first rule would be met with a gap - or headroom - of £23.6bn. However, this headroom is expected to have shrunk.

Analysts are divided on how much it may have fallen by. While a rise in government borrowing costs will increase debt interest payments, higher inflation could push up tax revenues.

KPMG believes the government's buffer could have fallen to £12bn, but the Institute for Fiscal Studies estimates it could be £20bn.

There has been speculation over what specific measures will be announced in the Budget.

Bank bosses have told the BBC they expect Healey to raise taxes on the sector . UK banks have been reporting bumper profits, leading to calls from unions for higher taxes.

The Treasury has options: it could raise a 3% surcharge on profits which was lowered from 8% under the previous Conservative government, or it could raise the bank levy that is based on the size of their balance sheets.