Tax on banks, energy bill help and minimum wage rise – what could be in the Budget?

Tax on banks and energy bill help expected in Budget

Ninoda.com – Tax on banks energy bill support could be among the major themes when Chancellor John Healey sets out Labour’s tax and spending plans in his first Budget. The government says it wants to give households more breathing space during a continuing cost-of-living squeeze, while also considering tax changes to fund targeted help.

Ministers have kept details tightly controlled ahead of the statement, but several measures are expected to feature. These include plans for first-time buyers, changes to pay, assistance with rising household costs and possible support for smaller businesses.

Housing and minimum wage measures

The Budget is expected to provide more detail on the proposed Your First Home scheme for first-time buyers in England. It would allow eligible people to purchase a new-build property with a 2.5% deposit and receive a loan worth 20% of the home’s value.

Buyers outside London could qualify with a combined income of up to £110,000, while the threshold in the capital would be £140,000. A minimum wage increase is also expected, although 18- to 20-year-olds are likely to receive a smaller rise than in the previous two years, in line with the increase for workers aged 21 and over.

Energy bills, pensions and bank taxes

Household energy bills are forecast to record their biggest rise for four years in January, with a typical annual bill expected to increase by £276. Healey has indicated that energy bill help may be available for households receiving certain benefits, making tax on banks energy bill policy a closely watched part of the Budget.

The government also plans to remove tariffs from 100 food items. Together with tariff suspensions introduced in June, it says the change could save households up to £21 a year. Fuel duty is expected to remain frozen, including the 5p cut introduced in 2022.

Pensioners whose only income is the state pension are expected to be protected from paying income tax through a new personal allowance. The full state pension is due to rise above the existing £12,570 threshold to £13,036.40, which would otherwise bring around one million people into income tax.

Bank executives expect the chancellor to increase the taxes paid by lenders, potentially reversing a previous reduction in the surcharge on bank profits from 8% to 3%. He could also raise the levy charged on banks’ balance sheets. Any tax on banks energy bill package would be designed to support households facing higher costs.

Support for shops and businesses

Online retail platforms such as Amazon and eBay could become responsible for collecting tax owed by traders using their sites. The revenue is expected to help fund business-rates support for High Street shops, including raising the threshold at which smaller firms begin paying rates from £12,000 to £18,000. Support for small breweries is also planned.

Healey has said the government wants to cut unnecessary paperwork, with ministers estimating that regulatory changes could save businesses up to £800m. The measures come as economic growth is expected to slow and inflation remains above the Bank of England’s 2% target, reaching 3.1% in the year to August.

Frequently asked questions

Who could receive help with energy bills?

Households on certain benefits are expected to be the focus of any targeted energy bill help. Full eligibility details would need to be confirmed in the Budget announcements.

Will banks pay more tax?

Bank bosses expect higher taxes, possibly through changes to the surcharge on profits or the levy on balance sheets. The final decision will be set out in the Budget.

What does this mean for fuel costs?

Fuel duty is expected to stay frozen, and the existing 5p cut is expected to remain in place.