Healey's first Budget on 28 October could bring higher taxes on banks

Chancellor John Healey will present his first Budget to MPs on 28 October, and he has declined to rule out tax rises, according to a preview by BBC News. He has acknowledged that government borrowing costs are at what he called "historic highs". His options are narrowed by Labour's pre-election pledge not to raise income tax, National Insurance or VAT.

A smaller financial cushion

The government has said it will keep the two fiscal rules set by former chancellor Rachel Reeves. One is to stop borrowing for day-to-day spending by the end of this parliament. The other is to have debt falling as a share of national income by the same point. In March, the Office for Budget Responsibility estimated a margin of £23.6bn against the first rule. That cushion is now thought to be smaller.

Forecasters differ on how much smaller. KPMG suggests it could have dropped to around £12bn, largely because borrowing costs have risen. The Institute for Fiscal Studies expects a milder fall to about £20bn. It notes that higher inflation may lift tax receipts as pay rises push more earners into higher bands. One idea under discussion is for Healey to accept a thinner buffer rather than raise taxes.

Measures affecting business

• Banks: Senior bankers have told the BBC they expect higher taxes on the sector, which has been reporting large profits. The Treasury could raise the 3% profits surcharge or increase the bank levy, which is based on balance sheet size.
• Online marketplaces and high streets: The Times has reported that large online platforms may have to collect tax owed by traders who sell through them. The money raised would help lift the business rates threshold for small firms from £12,000 to £18,000.
• Fuel and energy: Healey has said the Budget is the place to address rising petrol and diesel costs. He has not said whether the fuel duty freeze will be extended.

The Budget comes as the economy has held up better than expected. It grew by 0.4% in July and 0.1% in August. Inflation reached 3.1% in the year to August, driven by fuel prices after conflict in the Middle East disrupted oil and gas shipping. The Bank of England has kept interest rates at 3.75% but warned they may rise if energy prices stay high.

What it means for businesses

For companies and the people who run them, the Budget could change operating costs in several ways. Possible changes to business rates, fuel duty and tax rules for online selling could affect retailers, transport-dependent firms and small traders. Firms may want to review the Treasury and OBR documents published on the day before making spending or pricing decisions.