What the Budget could mean for high, low and middle incomes

On Wednesday next week John Healey will stand up in the Commons to deliver his first Budget as Chancellor.

The set-piece event will be hugely important for the British economy at a time of profound global economic instability, and represents the biggest test to date of Andy Burnham’s young government, which is currently leading in the polls.

It also carries great importance for the government, which is under pressure to help with the cost of living, but finding its ability to raise extra cash, or spend more, is constrained by already high levels of tax and debt.

As with all Budgets, the impact of Healey’s tax and spending measures will vary significantly depending on how much you earn.

A terror investigation is under way after one person was killed and four others injured in a drive-by shooting in a Paris suburb.

Police officers look at evidences on a site of a petrol station where a man opened fire from his car, killing one person and injuring four others according to police sources, in Trappes, Paris' suburb on October 23, 2026. 'This Friday morning, a man fired shots from his car at several people he came across in Trappes and La Verriere,' wrote Ali Rabeh, the mayor of Trappes, on Instagram. According to the Yvelines Prefecture, the emergency services are currently on the scene and the death toll 'has not yet been finalised'. (Photo by Dimitar DILKOFF / AFP via Getty Images)

What do we know so far?

  • Gunshots were fired in the Yvelines ​district and a suspect was arrested near the town of Trappes.
  • The motive is currently unclear but the anti-terrorism prosecutor’s office said it was investigating.
  • Mayor of Trappes Ali Rabeh said a man ⁠had fired shots ⁠from his car and “appeared to be firing at random and seemed ‌intent on carrying out a massacre”.
  • Rabeh said a 12-year-old ‌girl was also among the injured, but this has not been confirmed by police.

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The story so far in pictures

Police officers look at evidences on a site of a petrol station where a man opened fire from his car, killing one person and injuring four others according to police sources, in Trappes, Paris' suburb on October 23, 2026. 'This Friday morning, a man fired shots from his car at several people he came across in Trappes and La Verriere,' wrote Ali Rabeh, the mayor of Trappes, on Instagram. According to the Yvelines Prefecture, the emergency services are currently on the scene and the death toll 'has not yet been finalised'. (Photo by Dimitar DILKOFF / AFP via Getty Images)
Police officers look at evidences on a site of a petrol station where a man opened fire from his car, killing one person and injuring four others according to police sources, in Trappes, Paris' suburb on October 23, 2026. 'This Friday morning, a man fired shots from his car at several people he came across in Trappes and La Verriere,' wrote Ali Rabeh, the mayor of Trappes, on Instagram. According to the Yvelines Prefecture, the emergency services are currently on the scene and the death toll 'has not yet been finalised'. (Photo by Dimitar DILKOFF / AFP via Getty Images)
Police officers look at evidences on a site of a petrol station where a man opened fire from his car, killing one person and injuring four others according to police sources, in Trappes, Paris' suburb on October 23, 2026. 'This Friday morning, a man fired shots from his car at several people he came across in Trappes and La Verriere,' wrote Ali Rabeh, the mayor of Trappes, on Instagram. According to the Yvelines Prefecture, the emergency services are currently on the scene and the death toll 'has not yet been finalised'. (Photo by Dimitar DILKOFF / AFP via Getty Images)

Five key takeaways from the Mercury Prize 2026

NEWCASTLE UPON TYNE, ENGLAND - OCTOBER 22: (EDITORIAL USE ONLY) Raye, winner of the 2026 Mercury Prize for the album 'This Music May Contain Hope??? poses in the winners room during The 2026 Mercury Prize at the Utilita Arena on October 22, 2026 in Newcastle upon Tyne, England. (Photo by JMEnternational/Getty Images)

Raye has won the 2026 Mercury Prize for her second album This Music May Contain Hope, featuring the global hit song “Where Is My Husband?”

The pop record, on which Hanz Zimmer was a collaborator, beat the likes of Sir Paul McCartney, Olivia Dean and Ex-Little Mix star Jade to scoop the £25,000 prize.

First pop album to win

It is the first pop record to win the prize – which has recognised the best British or Irish album of the last 12 months since 1994.

Speaking to the BBC afterwards, Raye said she’d “poured everything I had” into the record – which was delayed by almost a year after all of her songwriting books and demos were stolen.

NEWCASTLE UPON TYNE, ENGLAND - OCTOBER 22: (EDITORIAL USE ONLY) Raye, winner of the 2026 Mercury Music Prize for the album ???This Music May Contain Hope??? performs onstage during The 2026 Mercury Prize at the Utilita Arena on October 22, 2026 in Newcastle upon Tyne, England. (Photo by JMEnternational/Getty Images)
Raye who has won the 2026 Mercury Prize for her album This Music May Contain Hope, at the Mercury Music Prize awards show at the Utilita Arena, Newcastle Upon Tyne. Picture date: Thursday October 22, 2026. PA Photo. Photo credit should read: Owen Humphreys/Press Association

Straying from the norm

NEWCASTLE UPON TYNE, ENGLAND - OCTOBER 22: Raye reacts as she is announced the winner of the Mercury prize for "This Music May Contain Hope" during The 2026 Mercury Music prize at Utilita Arena on October 22, 2026 in Newcastle upon Tyne, England. (Photo by Joseph Okpako/WireImage)
  • Of the last 35 winners, 20 have been debut albums – from artists including Arctic Monkeys, Suede and Franz Ferdinand.
  • Many people have mistakenly assumed the Mercury Price is dedicated to first albums – but this year’s shortlist included only two: Dove Ellis’s , and Jade’s .

A blow to record company execs

Raye’s win acts as a symbolic blow to mainstream music executives.

In 2021, the singer publicly cut ties with her former record label after accusing them of withholding her debut album for years.

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Rewarding the gritty long-form

Across 17 tracks and 73 minutes, Raye’s record tells a cinematic story about the end of a relationship where she emerges stronger and more resilient.

NEWCASTLE UPON TYNE, ENGLAND - OCTOBER 22: (EDITORIAL USE ONLY) A general view of fans cheering during The 2026 Mercury Prize at the Utilita Arena on October 22, 2026 in Newcastle upon Tyne, England. (Photo by JMEnternational/Getty Images)
(FILES) This photograph taken on April 19, 2024 shows a man holding a smartphone displaying the logo of Chinese social media platform TikTok in an office in Paris. A high-profile Japanese anime voice actor has taken TikTok to court over videos he says feature an artificial intelligence clone of his "lustrous" baritone, with a verdict due on September 30, 2026. (Photo by Antonin UTZ / AFP via Getty Images)

This year’s awards appeared to celebrate that gritty, long-form format over bubbly singles or TikTok-trending tracks.

Florence + The Machine now joint highest nominee with no wins

Florence + The Machine are now the Mercury’s joint highest nominee without winning, tying with Radiohead on five unconverted nominations.

Paul McCartney also missed out, alongside Britpop band Suede, rapper Dave, Knats, and debut star Dove Ellis.

NEWCASTLE UPON TYNE, ENGLAND - OCTOBER 22: (EDITORIAL USE ONLY) Florence + The Machine performs onstage during The 2026 Mercury Prize at the Utilita Arena on October 22, 2026 in Newcastle upon Tyne, England. (Photo by JMEnternational/Getty Images)

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Crystal Palace urged to retire bald eagle mascot – what we know

LONDON, ENGLAND - AUGUST 24: club's official live mascot American Bald Eagle "Phoenix" presented to fans for first time during the Premier League match between Crystal Palace FC and West Ham United FC at Selhurst Park on August 24, 2024 in London, United Kingdom. (Photo by Sebastian Frej/MB Media/Getty Images)

An animal rights group is urging Crystal Palace to retire their live bald eagle mascot with immediate effect.

The group, Peta, has argued that a “bright stadium filled with boisterous fans is no place for animals”.

What you need to know

  • Peta asked the Premier League club to stop using the eagle, named Phoenix, in pre-match displays at Selhurst Park and to never use live animal mascots again.
  • The London team, known as the Eagles since 1973, introduced a live eagle to matchdays in 2010.
  • Kayla, who died in 2020, performed the role for 10 years and her replacement, Phoenix, made her debut against West Ham in 2024.

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The impact on birds

  • Peta says birds can become “frightened, disoriented and panicked” in stadium environments, putting themselves and fans at risk.
  • Using them for entertainment means the animals cannot engage with their natural instincts, leading to “stress”, Peta added.
LONDON, ENGLAND - DECEMBER 29: Club's official live mascot American Bald Eagle "Phoenix" is presented to fans at half time during the Premier League match between Crystal Palace FC and Southampton FC at Selhurst Park on December 29, 2024 in London, United Kingdom. (Photo by Sebastian Frej/MB Media/Getty Images)

The organisation has “detailed records” of incidents involving live mascots being injured in these kinds of environments.

Waves crash over the lighthouse at Newhaven Harbour during Storm Austen in Newhaven, Britain, October 23, 2026. REUTERS/Toby Melville

The UK is braced for “damaging” winds and heavy downpours with two named storms expected to wreak disruption on Friday and over the weekend.

Storm Austen, the first named storm of the season, could bring gusts of up to 80mph to parts of south-west England, with 60-70mph winds expected widely in the region.

Where will be worst-hit?

The Met Office has issued an amber warning for wind, covering , and the Isles of Scilly, coming into effect from 1am and remaining in place until 10am.

  • Strong winds will be combined with spells of heavy rain, though gusts will gradually ease over Friday.
  • The forecaster said Storm Austen is “likely to bring some disruption and possible damaging winds” and warned of disruption on the roads.
  • Flying debris is “likely”, and the storm will “probably” bring some damage to buildings.
  • In coastal areas, large waves could pose a danger to life.

The story so far in pictures

FALMOUTH, ENGLAND - OCTOBER 23: A fallen tree brought down by heavy overnight winds, blocks the pavement on October 23, 2026 in Falmouth, England. Storm Austen is the first named storm of the 2026 winter season and expected to make landfall across the south-west of England and the Met Office has issued amber wind warnings for Cornwall, The Isles of Scilly, Plymouth and Devon for gusts expected to reach 45-70mph. (Photo by Hugh R Hastings/Getty Images)
TRURO, ENGLAND - OCTOBER 23: Vehicles are diverted around a road closure caused by fallen trees on the A39 main road between Falmouth and Truro on October 23, 2026 in Playing Place, Truro, England. Storm Austen is the first named storm of the 2026 winter season and expected to make landfall across the south-west of England and the Met Office has issued amber wind warnings for Cornwall, The Isles of Scilly, Plymouth and Devon for gusts expected to reach 45-70mph. (Photo by Hugh R Hastings/Getty Images)
A person watches from the beach as waves crash onto Newhaven Harbour during Storm Austen in Newhaven, Britain, October 23, 2026. REUTERS/Toby Melville

The impact of the storm

MANCHESTER, ENGLAND - OCTOBER 19: Insulators on an electricity sub station are seen near homes on October 19, 2022 in Manchester, England. The British utility company, National Grid, have said that UK households may face power cuts this winter for up to three hours at a time, if gas supplies run low. The UK relies heavily on gas to produce electricity, and gas supplies to Europe have been severely disrupted by the fallout from Russia's invasion of Ukraine. (Photo by Christopher Furlong/Getty Images)

Power cuts have affected more than 9,000 homes in Cornwall and Devon.

(FILES) In this file photo taken on March 05, 2020 Flybe aircraft are pictured on the tarmac at Exeter airport in Exeter, south-west England, following the news that the airline had collapsed into bankruptcy. - British airline Flybe said on January 28, 2023, it had ceased trading and all flights had been cancelled. "We are sad to announce that Flybe has been placed into administration," the airline tweeted. (Photo by GEOFF CADDICK / AFP) (Photo by GEOFF CADDICK/AFP via Getty Images)

Flights to and from Exeter airport have been cancelled.

There will be 'significant' disruption across the rail network on Sunday

Great Western Railway (GWR) has imposed speed limits on routes between Devon and Cornwall.

FALMOUTH, ENGLAND - OCTOBER 23: A parked car is surrounded by fallen branches on October 23, 2026 in Falmouth, England. Storm Austen is the first named storm of the 2026 winter season and expected to make landfall across the south-west of England and the Met Office has issued amber wind warnings for Cornwall, The Isles of Scilly, Plymouth and Devon for gusts expected to reach 45-70mph. (Photo by Hugh R Hastings/Getty Images)

Network Rail Scotland also said its trains will also be slowed down in areas with heavy rain.

Primary school kids eat lunch in school cafeteria, close up

The expert view

This is the first stormy weather in the south of the UK this season and we expect some disruption as it moves through. With trees in leaf, it is likely fallen branches and trees could obstruct roads and railways so take extra care on the Friday morning commute.

Neil Armstrong, Chief met office forecaster
Waves crash over Newhaven Lighthouse and the breakwater in Newhaven, southern England on October 23, 2026, as as Storm Austen brought strong winds and heavy rain across much of southern England. Storm Auste (Photo by GLYN KIRK / AFP via Getty Images)
Horticulturalist Liz Mooney pictured with the range of pumpkins and squash at RHS Garden Wisley, Surrey. Autumn Turnaround Gardening RHS Image supplied by RHS

The autumn jobs gardeners are getting wrong – and the easy fixes

Advice changes over time

Gardener digging in red wellington boots

Digging over the soil

Standard advice has been to dig soil every autumn. But according to organic gardener Charles Dowding, soil should be disturbed as little as possible.

Clearing dead leaves

Raking fallen leaves can be counterproductive. Leaves on flower beds are a useful source of organic matter.

Eurasian blue tit (Cyanistes caeruleus) on peanut bird feeder, Ashdown Forest, Sussex, England

Bird feeding

While new studies suggest bird feeders can spread disease.

Save birdseed for colder months

A disease called trichomonosis can spread to greenfinches and chaffinches via birdfeeders. Greenfinch numbers have dropped by 60 per cent in the UK since the 1990s, mainly due to this disease.

The Royal Society for the Protection of Birds (RSPB) said this year people should only offer birdseed and peanuts from November to April, when the cold kills off the parasite.

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 A more laissez-faire approach

Leave the mess

Once flower beds have died back, it is tempting to neaten things up. But seed heads are a food source for birds, while leaves can become shelters for insects that are fodder for robins, wrens and goldcrests.

Dividing perennials: Dividing Phlox into smaller clumps for replanting at RHS Garden Wisley in Autumn. Image via Guy Barter
Planting lily bulbs in container. Image via Guy Barter

No crocks in pots

Standard advice is to put a layer of coarse material at the bottom of every pot to improve drainage. But this can actually saturate the compost even more – which we don’t want.

Europe’s record-breaking summer killed 50,000 people

TOPSHOT - Beach goers sit on the beach of Moutchic in Lacanau, southwestern France on July 24, 2026, as clouds of smoke rise into the sky from a wildfire. The fire raging in the northern part of the Arcachon Basin in Gironde, southwest France, has swept through more than 3,400 hectares, according to the latest figures released by the prefecture. More than 20,000 residents and tourists have been evacuated from this part already devastated by flames in 2022. Scientists have long warned that climate change caused by human use of fossil fuels will make periods of drought more intense and longer-lasting, creating the ideal conditions for wildfires. (Photo by Maximilien LAMY / AFP via Getty Images)

More than 50,000 people are estimated to have died across Europe as a result of this summer’s record-breaking heatwaves, according to a new study.

Researchers estimate there were 4,354 excess deaths in the UK alone this summer.

Excess deaths have doubled

The number of excess deaths across Europe doubled in 2026, in comparison with last year – far surpassing the previous record of 29,000 deaths.

This was recorded in 2022 when the continent again endured exceptionally high temperatures, and the UK experienced 40°C for the first time.

MADRID, SPAIN - AUGUST 08: High temperatures have continued in the Spanish capital Madrid, Spain on August 08, 2022. Madrid is the fourth city in the world with the most deaths from extreme heat, according to the study by 'Carbon Brief', a British organization dedicated to the study of climatic events. The Spanish State Meteorological Agency reports that 13 communities are on yellow alert due to high temperatures and strong winds, temperatures that reach almost 40????C in various parts of the country. (Photo by Diego Radames/Anadolu Agency via Getty Images)

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Heat worsens underlying conditions

What are excess deaths?

MADRID, SPAIN - JULY 18: A digital thermometer reads 43 degrees Celsius on Paseo de la Castellana on July 18, 2023 in Madrid, Spain. An area of high pressure, named Cerberus after the underworld monster from Dante's Inferno, is making its way across the country, leading 13 of the 17 autonomous communities to be categorized as either extreme risk (red alert), significant risk (orange alert) or (yellow alert), with some places recording temperatures of 43C. With an ongoing drought and heatwave credited to climate change, extreme weather has already affected people in Spain, WHO reported in 2022 more than 4,000 excess deaths due to heat stress. (Photo by Miguel Pereira/Getty Images)

Excess deaths are those that occur outside of the number that would occur under normal conditions. Heat is often dubbed a “silent killer” that can worsen underlying health conditions, resulting in more deaths.

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Death toll may be higher in reality

30°C

According to the Met Office, the UK saw its hottest ever summer this year with five widespread heatwaves, and 40 days where the temperature was above 30°C.

Mainland Europe experienced its third hottest summer.

40%

Researchers looked at 854 urban areas in 30 European countries.

Because the study only looked at urban areas –roughly 40 per cent of each country’s population– researchers believe the death toll could be an underestimate.

Countries hardest hit by heat

According to the study, published in , southern and western Europe were hardest hit.

There were an estimated 22,000 deaths among those aged 85 and over. However, researchers noted that an estimated 6,000 people under the age of 65 are also likely to have died as a result of heat.

Around a third of the deaths took place in late June – before people had a chance to acclimatise to the weather, and when average temperatures across Europe were more than 5°C above normal levels.

  • Italy experienced the highest number of excess deaths (13,303)
  • Followed by France (7,268)
  • And then the UK (4,354)

The expert view

It is yet another reminder both of the imperative of rolling out targeted interventions to protect those who are most vulnerable to this increasingly extreme heat, and of the growing need to rapidly transition away from fossil fuels.

Dr Clair Barnes, extreme weather and climate change researcher at Imperial College
Dead fish from a nearly dried up pond at a housing estate in Pinhoe, Exeter. //Residents have slammed the Environment Agency after reporting fish struggling in a 'rapidly' drying pond - with hundreds already dead due to drought. Videos show fish flapping in just inches of water in a large pond that has nearly dried up at a housing estate in Pinhoe, Exeter.The news comes as almost three-quarters of England is now in drought as weather conditions have become hotter and drier due to climate change - as much of Europe is about to enter its fifth heatwave of the summer.Adrian Clarke, 55, who lives five miles away from the pond, posted pictures of the struggling fish on Facebook when he first saw the sight last Wednesday (5 Aug) and received hundreds of comments from concerned locals. Photo released 14/08/2026

NHS Mounjaro roll-out plan deemed ‘unambitious’ by MPs

LONDON,ENGLAND - MAY 30: A photo illustration of a Mounjaro pen on May 30 2025 in London, England. Mounjaro is a treatment for weight loss and type 2 diabetes. (Photo by Peter Dazeley via Getty Images)

Current plans for rolling out weight-loss drug Mounjaro on the NHS “are unambitious” and reach a “woefully small number of people”, MPs have said.

What you need to know

6%

Only around 6 per cent of eligible people will get or currently receive Mounjaro on the NHS in its first three years, with millions more turning to private firms, according to the Commons Health and Social Care Committee.

MPs also used their report to call for obesity to be treated as a long-term condition like diabetes, and said people suffer relapses.

  • They pointed to the “two-tier system” that has developed for access to drugs, adding: “The Government must urgently reassess the pace of roll out of Mounjaro.”

As a first step, the department should hold a summit on GLP-1 access with a range of providers and healthcare professionals to open a dialogue on how best to improve the roll out.

basra, Iraq ??? November 12, 2025: A close-up of a person administering a Mounjaro KwikPen injection on their abdomen, focusing on healthcare and treatment.

A closer look at the detail

  • In June 2024, the National Institute for Health and Care Excellence (Nice) recommended Mounjaro as an option for managing overweight and obesity.
  • The NHS has also approved semaglutide (Wegovy) for obese people, though many get their prescriptions privately due to a lack of access on the NHS.
  • With Mounjaro, the NHS estimated 2.8 million patients would be eligible and, if all presented within the first year of availability, the cost would be £15.2bn over five years.

The gradual roll out of Mounjaro

As a result, Nice agreed to NHS England’s request that the roll out of Mounjaro should be done gradually, MPs said.

The NHS has been giving access to 220,000 people over three years, with the Health Foundation saying this makes up only around 6 per cent of those who would be eligible based on Nice’s recommendation.

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  • In their report on obesity, MPs said a new framework is needed to “include ambitious targets for the proportion of a local population that should be able to access GLP-1s”.
  • Data suggests more than 2.37 million packs of GLP-1s are being prescribed every month in the UK, “with the vast majority of these being accessed privately”, the study said.
EMBARGOED TO 2330 WEDNESDAY JANUARY 7 Picture posed by a model. File photo dated 03/03/14 of someone using a set of weighing scales. People on fat loss jabs need ongoing support, researchers have said, after a major study found they put all the weight back on much faster than traditional dieters. Researchers from the University of Oxford discovered that people on drugs including semaglutide (Wegovy) and tirzepatide (Mounjaro) lose weight during treatment but, on average, regain it within 20 months of stopping the jabs. Issue date: Wednesday January 7, 2026. PA Photo. Photo credit should read: Chris Radburn/PA Wire
An image of the prostate of patient William Robnett of Monterey which were used to pinpoint where biopsies were taken from during the procedure at the Stanford Cancer Center in Palo Alto, Calif., on Friday May 9, 2014. Dr. Geoff Sonn is using an Artemis robotic device along with MRI and ultrasound imaging to greatly increase the accuracy when collecting prostate biopsies. (Photo by Michael Macor/San Francisco Chronicle via Getty Images)

 to give NHS doctors ‘second pair of eyes’ on  MRI scans

A number of AI programmes are set to be used by the NHS in England to help doctors spot prostate cancer on MRI scans.

The technologies would act like a “second pair of eyes” for medics, the National Institute for Health and Care Excellence (Nice) said.

What you need to know

The NHS spending watchdog has recommended five tools in new draft guidance, which will be used on the health service for two years while evidence is gathered on how they work.

The technologies are designed to help radiologists by highlighting areas on prostate scans where cancer may be present.

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Pressure on radiologists

Patient entering an MRI scanner tunnel in a diagnostic imaging center and a female technician operating the machine
  • According to Nice, demand for prostate MRI has increased, as pre-biopsy scans are now included to confirm or rule out the disease.
  • This has put pressure on radiology teams, which are already stretched because of workforce pressures.

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The expert view

These AI technologies have the potential to act like a second pair of eyes, helping radiologists review prostate MRI scans. They have the potential to make MRI reporting more accurate and could help identify people whose scans need priority review.

Dr Anastasia Chalkidou, programme director for HealthTech at Nice
A radiologist examines CT scans (Photo: Getty Images)

While the Chancellor has had better luck than his predecessor Rachel Reeves in keeping the contents of his red box secret – partly because of the introduction of military-style information security protocols – the outlines of the Budget are starting to become clear.

Here’s what it could mean for you, according to income.

Things that will affect everyone

It’s worth noting at the outset that there are a few fundamentals to this Budget that will affect everyone, regardless of how much you earn.

Burnham and Healey have decided to stick with the tax commitments that Labour made in its 2024 general election manifesto. That means there will be no change to VAT, employee national insurance contributions or the basic, higher and additional rates of income tax.

The Government will also keep the state pension triple lock for the entirety of this parliament, meaning the state pension will rise from £12,548 to £13,036.40 a year in April 2027. Burnham has said that after the next election he will adjust the triple lock to make it less generous, but this will not come into effect until April 2030.

Low income

The official government definition of low income is 60 per cent below the median income of a particular year. The actual figure can change according to household size (ie a single person needs less income than a family of four) – the ONS put the median disposable household income for the poorest fifth of the population at £18,300 a year for the financial year ending in 2025.

Burnham and Healey have repeatedly promised that they will provide “breathing space” on the cost of living on 28 October.

The Chancellor recently said that cost of living support will be “targeted and temporary”, meaning it will be time limited and focused on those on lower incomes.

Low-income households are likely to receive help with energy bills, which have jumped in the wake of the US-Iran war.

The Ofgem price cap – the limit on what suppliers can charge for each unit of energy – rose by 4 per cent to £1,723 a year for a typical household on 1 October, and it is forecast by energy consultancy Cornwall Insight to rise by a further 16 per cent to £1,999 in January.

When Burnham became Prime Minister one of his first moves was to cut VAT on household electricity from 5 per cent to zero from 1 October, saving a typical household about £45 a year. The cut is only due to last until 31 March, and The i Paper revealed last week that Healey is unlikely to extending it beyond this point.

Rather than another universal measure, extra support will be targeted at low income households. The i Paper reported back in August that the Government was likely to use means-tested benefits as the criteria for directing support. This could take the form of boosting the Warm Home Discount, a £150 reduction on bills for around six million households on means-tested benefits, with  reporting that the Chancellor is considering adding £100 to it.

There will also be news in the Budget for low income pensioners. Because the state pension is set to exceed the £12,570 income tax personal allowance for the first time this April, the Government has said it will act to stop poorer pensioners from being caught in a tax trap.

This will mean that pensioners solely reliant on the state pension will not have to pay income tax on it. While it is still not clear what mechanism will be used to exempt people, the most likely option is that the Government will “opt out” of collecting the small tax sums from relevant pensioners, which would normally be due via HMRC’s “Simple Assessment” process.

Middle income

The Budget’s consequences for middle income earners – the ONS puts the median disposable income at £39,200 – is likely to depend heavily on their behaviour and what they do for a living.

For example, drivers may benefit from action on fuel duty – the tax charged on every litre of petrol and diesel.

A temporary 5p-a-litre cut, first introduced in 2022, is set to be phased out under plans introduced by former chancellor Rachel Reeves, with a 3p rise on 1 January and a further 2p on 1 March.

Governments of all stripes have repeatedly chosen to freeze fuel for years, so it is highly possible that Healey will cancel the planned increases.

Small business owners are meanwhile likely to get a cut to business rates funded by a tightening of tax rules on online retailers. For the first time, online marketplaces such as Amazon, eBay and Temu will be made responsible for collecting tax owed by retailers selling on their platforms in a move which is expected to raise up to £1bn.

A Treasury source told that this would be used to give relief to small businesses on the high street. The source said the Chancellor wanted to “protect local family businesses and the high streets we love”. 

“That means having the beauticians and white van drivers of our towns at the forefront of his mind as the Budget draws nearer,” they added.

High income

For those on high incomes – Median household disposable income for the richest fifth of the population is £77,000 according to the ONS – the most important bit of the Budget is likely to be what Healey has decided to leave out of it.

While some leftwing Labour MPs have called for a radical wealth tax, the Chancellor has ignored their advice.

A more plausible revenue raiser would have been for the Government to increase capital gains tax – the tax paid on the sale of assets such as second homes and shares. However, Healey has also ruled out a CGT hike following fears that it could actually result in the Treasury losing money because of people hanging onto assets or relocating abroad to avoid the tax. It’s good news for the high net worth individuals who overwhelmingly pay the tax.

High earners in the banking sector could be indirectly affected by a windfall tax on banks’ profits which is almost certain to come in the Budget. Individuals who own shares in the big four British banks – HSBC, Barclays, Lloyds Banking Group, and NatWest Group – or who invest in them via a FTSE tracker fund, will have already seen a dip in the share prices of these companies since speculation about a tax raid began to mount from August.

Wealthy households looking to access subsidies to replace their boilers with heat pumps will also be affected by the Budget. Ministers are expected to confirm that hundreds of millions will be cut from the £2.7bn Boiler Upgrade Scheme (BUS) to help cover extra defence spending.

Under the BUS, eligible households in England and Wales can receive £7,500 towards an air-source or ground-source heat pump, rising to £9,000 for qualifying homes heated by oil or liquefied petroleum gas. Given these subsidies cover only just over half the cost of the median heat pump, to date much of the BUS money has gone to better-off households.

The final impact on households will depend on the eventual size of the cut, whether grant values or eligibility rules change, and how existing applications are treated, but tens of thousands of households could miss out on thousands of pounds towards installing heat pumps.

Original source What the Budget could mean for high, low and middle incomes

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