Chancellor John Healey faces pressure to create room for policy priorities in an uncertain economic environment, and government officials are reported to be exploring avenues to raise additional revenue without resorting to higher income tax. BBC Verify has examined the choices that could be available to ministers as they prepare the next Budget.
Step up enforcement and close loopholes
One option is to boost receipts by strengthening tax compliance and closing avoidance routes. That can mean more resources for HM Revenue & Customs, targeted investigations into aggressive tax planning and legislative changes to block loopholes. Such measures typically raise revenue over the medium term and tend to be presented as efforts to ensure fairness rather than new taxes.
Shift the tax mix or tweak rates elsewhere
The government could also seek money by adjusting other taxes — for example corporation tax, capital gains tax, value-added tax exemptions, environmental levies or duties such as fuel duty. These changes can raise substantial sums more quickly than compliance measures, but they carry potential economic and political consequences and may affect businesses or household budgets in different ways.
One‑off levies and sectoral charges
Targeted, temporary charges are another route. Past administrations have turned to windfall taxes or sector‑specific levies on energy firms, banks or other profitable sectors to raise funds in a concentrated period. These measures can be politically expedient and quick to implement, but they often face industry pushback and questions about long‑term fairness and investment impacts.
Spending restraint and reprioritisation
Beyond raising receipts, the Treasury can increase fiscal headroom by cutting spending, delaying planned commitments or reprioritising budgets within departments. Adjusting benefit uprating, public service spending plans or capital projects would free resources but risks public and political fallout if popular programmes are scaled back.
Any combination of these approaches involves trade‑offs between speed of receipts, economic effects and political acceptability. Ministers must weigh immediate fiscal needs against longer‑term growth and distributional consequences as they finalize policy choices ahead of the Budget.