Overview
- Late September 2026 reporting shows the Treasury is actively debating accepting a smaller fiscal headroom than the £23.6bn the OBR set in March to reduce the need for large headline tax increases in the October 28 Budget.
- Ministers are focusing on wealth‑targeted revenue measures such as capital gains tax equalisation, lower thresholds for the high‑value council tax surcharge and a bank or windfall levy as ways to raise funds without increasing headline income tax, VAT or national insurance.
- Senior OBR economist David Miles and other economists have warned that further tax rises could harm growth, and several market participants say trimming the formal buffer risks unsettling gilt markets and raising government borrowing costs.
- Business groups and banks have publicly warned that higher CGT or new wealth levies would hurt investment and could prompt firms or wealthy owners to relocate, while a poll shows voter support for measures such as a bank windfall tax and lowering the mansion‑tax threshold.
- The choice confronting Healey combines market credibility, OBR scrutiny and political constraints set by manifesto promises, and it will determine whether the government uses wealth measures, spending cuts or extra borrowing to close the newly narrowed fiscal gap.