UK tax changes under Andy Burnham and John Healey: what businesses and individuals need to know

How Labour’s leadership changes could affect UK tax planning and compliance

With Andy Burnham becoming Prime Minister and appointing John Healey as Chancellor of the Exchequer, attention is already focused on what the change in leadership could mean for the UK’s tax system.

At this stage, however, there are more questions than answers. However, there has been an early announcement that VAT is to be removed from household energy bills from 1 October – an early indication that targeted measures to combat cost of living will be high up the agenda.

While there has been considerable speculation about potential tax changes, both the Prime Minister and Chancellor will inherit a challenging fiscal position alongside a government programme that is already progressing with several tax reforms. For businesses and individuals alike, those existing changes may prove more important in the short term than any future announcements.

What has Andy Burnham said recently about UK tax policy?

One of the signals from Mr Burnham since it became clear he was likely to become Prime Minister has been his commitment to Labour’s 2024 manifesto pledge not to increase the main rates of income tax, VAT or employee National Insurance contributions (NICs). He has also indicated that he intends to continue operating within the government’s fiscal rules, which are designed to ensure that day-to-day spending is funded from tax revenues and that government debt falls as a share of the economy over time.

Those commitments are likely to limit some of the government’s options if it wishes to fund additional spending.

Mr Burnham’s first speech outside Number 10 on Monday also provided some indications of his priorities. He said he wanted to give people some “breathing space” and indicated that further details, including how measures would be funded, would begin to be set out from today. While that suggests the government may move quickly to announce some initial priorities, it remains too early to know the scale of the tax changes that could arise. As noted above, removing VAT on household energy bills is a clear indication that cost of living measures, and utilising tax to facilitate these measures, are part of the plan.

Mr Healey brings extensive ministerial experience to the role, having served in a number of government and shadow cabinet positions over almost three decades in Parliament, including as Financial Secretary to the Treasury. More recently he served as Defence Secretary, resigning in June 2026 amid a dispute over the pace of planned increases in defence spending. His appointment means that the minister previously pressing for higher defence spending will now be responsible for helping to balance those demands with the government’s fiscal rules and wider spending commitments.

When might tax changes be announced?

Any major tax announcements are unlikely to be immediate. Significant fiscal events are generally accompanied by forecasts from the Office for Budget Responsibility (OBR) and, under the usual process, the Chancellor would be expected to give the OBR at least 10 weeks’ notice. Given the timing of the parliamentary summer recess, this points to a Budget later in the autumn, assuming Mr Healey continues the approach of holding a single major fiscal event each year.

However, there could be more targeted tax measures announced in the coming days.

Key tax areas to watch under the new Prime Minister and Chancellor

Income tax personal allowance

Mr Burnham has said he is looking at the income tax personal allowance, saying it was one of the issues he heard most frequently from constituents in Makerfield and that lower earners may have been particularly affected by recent threshold freezes.

Employer National Insurance

During the Makerfield byelection Mr Burnham said he wanted to reconsider the increase in employers’ NICs announced in Labour’s Budget in 2024 which took effect in April 2025. This has led to speculation that the new government could reverse or partially reverse those changes.

Property taxes

The government is already progressing plans for the High Value Council Tax Surcharge (HVCTS), often referred to as a ‘mansion tax’, which is due to apply to residential properties in England worth more than £2 million from April 2028. The detailed design of the regime has recently been the subject of consultation and the government is currently analysing the feedback

It has been suggested that a new administration could revisit aspects of the surcharge, including the thresholds, given wider debates about the taxation of wealth and property.

The proposed surcharge is summarised in the ‘Mansion Tax’ consultation article and you can read Saffery’s response to the consultation here.

Separately, Mr Burnham has previously advocated wider reform of property taxation, including land value tax and alternatives to the current council tax and stamp duty land tax systems, indicating that property taxation could be an area where the new government’s focus remains.

Business rates

Mr Burnham has expressed support for a 20% reduction in business rates for pubs, clubs and music venues, with smaller, independent hospitality, leisure and retail companies having the threshold for paying business rates raised. While we don’t know whether any specific reforms will be pursued, the future of business rates is likely to remain part of the wider debate about supporting high streets and regional growth.

Inheritance tax and agricultural property

There has also been speculation that the new government could review the April 2026 changes to the inheritance tax (IHT) agricultural property relief (APR). The changes mean that rather than the 100% rate of APR and business property relief (BPR) being unlimited it is capped at the first £2.5 million of combined agricultural and business property. The value of assets qualifying for APR or BPR above the £2.5 million limit will receive relief at 50%.

For more on the changes you can see our article Agricultural Property Relief and Business Property Relief reforms from 6 April 2026.

Devolution and local taxation

One of the areas we have heard from Mr Burnham on is his plans for devolution. While there have been no announcements about additional tax powers, a renewed focus on devolution is likely to lead to further discussion about how local and regional authorities, and the devolved parliaments raise revenue and fund services.

Wealth taxes and capital gains tax (CGT)

Some commentators have also pointed to capital gains tax (CGT) and wider wealth taxation as areas that could attract attention because they were not covered by Labour’s commitment on taxes on working people in its 2024 manifesto.

The area of greatest immediate behavioural impact may be CGT. No formal proposal has been announced, but speculation about higher CGT rates, or closer alignment with income tax rates, could affect business disposals and succession planning. However, CGT and income tax alignment for business disposals could stall the UK economy if it makes owners of trading businesses less likely to sell shares or an interest in their business.

Tax changes already scheduled

While attention is focused on the arrival of a new Prime Minister and Chancellor, it is important not to lose sight of the substantial tax changes already underway.

These measures include:

• Frozen income tax and National Insurance thresholds until April 2031, resulting in more individuals being drawn into higher tax bands over time (although it is possible the income tax personal allowance will be reconsidered),
• A new International Controlled Transaction Schedule (ICTS) reporting requirement for large multinational groups from January 2027,
• The introduction of the UK’s Carbon Border Adjustment Mechanism (CBAM) from January 2027, creating new reporting requirements and potential additional costs for businesses importing certain carbon-intensive goods,
• Increases to the rates of tax on savings income and rental income from April 2027,
• Charging unused pension funds and certain pension death benefits to inheritance tax from April 2027. For more on this see our recent webinar Pensions and IHT in 2027,
• Requiring employers to report and pay for employee benefits on company cars, car fuel, vans, van fuel and employer-provided medical benefits through payroll as they are provided from April 2027, with the extension to many other benefits from April 2028,
• The proposed High Value Council Tax Surcharge (HVCTS) on residential properties in England worth £2 million or more from April 2028,
• Mandatory e-invoicing from 2029,
• Changes to pension salary sacrifice from April 2029, when the amount of pension contributions benefiting from National Insurance savings through salary sacrifice will be capped at £2,000 per employee per year,
• Proposals to introduce more timely payment of Income Tax Self Assessment from 2029, potentially requiring some taxpayers to pay tax closer to the point income arises.

For many taxpayers, these existing measures will require their more immediate attention.

The government is also consulting on potential wide ranging changes to the taxation of company distributions, capital returns and demergers, which could result in important future changes for shareholder transactions and business reorganisations. For more on the potential changes see our Corporate tax update for July 2026.

What taxpayers should expect next

A change of Prime Minister and Chancellor always creates uncertainty. However, there is currently little evidence that the government is planning immediate tax reform; flexibility is likely to be retained until the Budget.

The government’s commitments on income tax, VAT, employee National Insurance and the fiscal rules provide some indications of the direction of travel, but the detail will only emerge once the Chancellor has had the opportunity to assess the public finances and set out his priorities.

How Saffery can help you with tax planning and compliance

Whether you are considering succession planning, a shareholder transaction, a business reorganisation or simply want to understand how announced and proposed tax changes could affect you, our tax specialists can help you assess the potential impact and identify any actions worth considering now. If you would like to discuss any of the issues raised in this article, please get in touch with your usual Saffery contact or use the Get in touch form.