Decisions delayed as economic challenges mount.

Just 101 days into the new government, John Healey's first Budget as Chancellor was designed to avoid trouble with the bond vigilantes. The Office for Budget Responsibility (OBR) puts headroom against the stability rule at £15bn in 2029-30, rising to £22bn in 2030-31, with a near-evens 56% chance of meeting the rule (down from 59% last time). The OBR expects debt interest to be £15bn higher than in March this year and the Budget document attributes the deterioration to the conflict in the Middle East.

There are 98 measures, none of which are large enough to start a fight in a Budget of front-loaded relief and back-loaded tax: policy decisions cost £7.6bn in 2026-27 and raise £7.4bn a year by 2031-32. The tax measures alone move from a £1.6bn net giveaway this year to about £5.6bn a year by 2029-30 and £7bn by 2031-32. Sections 3 to 6 show where that money comes from.

The tax burden keeps growing

The OBR expects tax to pass its historic high of 37.2% of GDP in 2027-28 and to rise every year after, ending about 5.7 percentage points above 2019-20 by 2031-32. This Budget adds 0.2 points. Income tax and National Insurance thresholds stay frozen until April 2031 and real household disposable income per person is forecast to be an anaemic 2% above its pre-pandemic level in 2030-31. Growth is forecast at 1.2% in 2026 and 1.0% in 2027, then between 1.6% and 1.8% a year from 2028.

Business reaction divided by exposure

The Times reported housebuilders down about 7% while Whitbread rose 5.6% and SSE 4.6%. A JP Morgan spokesperson said the bank surcharge "lacks principle". UK Finance said a bank tax was not the best route to growth but welcomed the time limit and the National Residential Landlords Association said the property income increase will raise rents and cut supply. The CBI had warned before the Budget that tax rises on the financial sector would be an "own goal" and the TaxPayers' Alliance pointed to a record tax burden.

The speech was organised around a short list of choices. Figures are Exchequer effects in £m; a positive figure raises revenue.

Grouped by who bears them, about £4.1bn falls on companies and their owners. A further £1.0bn falls on individuals with savings and rental income and £2.0bn comes from HMRC compliance, debt and payment measures, of which the OBR expects only about a third to reduce the tax gap.

The compliance line is the largest in the package and the least visible, because it changes no rate. Table 6.1 puts it at £1,980m in 2029-30, rising to £3,160m in 2031-32. The costings show the Self Assessment in-year payment reform alone at £1,355m in 2029-30, rising to £1,815m and say the figure reflects both changes in the timing of payments and behavioural responses. The OBR notes that the reform partly reverses last year's mandatory coding out through PAYE. Because the OBR's forecast assumes the tax gap declines, this line carries more forecasting risk than a rate rise does.

The writing-down allowance change was presented in the speech as greater upfront relief. The net costing is a tax increase of £765m in 2027-28, rising to about £1.1bn a year. The costing assumes some businesses shift to more generous regimes and some claims are non-compliant.

The offsetting reliefs are narrow. Founders' Relief reaches about 600 individuals and 400 businesses a year and costs £260m in 2029-30. With EMI2 and the larger trading allowance it costs £470m, about 7% of the 11 tax raisers. The OBR also warns that capital tax yields are sensitive to equity prices and to how people respond, which is the usual route to further tightening if receipts disappoint.

The practical reading is that exposure for private and owner-managed businesses arrives from April 2028 and April 2029, while the consultations that shape it run through 2027.

HMRC's wealthy compliance plan

HMRC published a wealthy compliance plan with a foreword by James Murray. It defines the wealthy population as people with income over £200,000 or assets over £2m in any of the last three years. That group has grown from about 700,000 in 2021-22 to 1.3m in 2025-26 although, in HMRC's words, the criteria have not changed. It paid £160bn in 2025-26 and the estimated wealthy tax gap is £3.6bn in 2024-25, about 6% of the total tax gap. In summer 2026, HMRC identified more than 200 billionaires with a UK tax footprint and gave each a Customer Compliance Manager and an offer of a voluntary discussion.

The criteria are unchanged in cash terms, so rising asset values and frozen income bands move more households into a category that attracts closer attention. Anyone whose company stake or home takes assets above £2m is in the population, which HMRC itself describes as broad and varied. The plan follows a National Audit Office report in May 2026.