Healey Considers New Revenue Options as Labour Aims for Balanced Budget Without Raising Income Tax

Sources say Chancellor John Healey is evaluating a package of fiscal steps that could raise extra funds for the forthcoming Budget, all while leaving personal income‑tax rates untouched to safeguard voter‑friendly thresholds.

The drive for additional income arrives as the administration faces shrinking fiscal space following a string of major spending pledges, from infrastructure works to social initiatives. Treasury insiders are reportedly weighing ways to meet these commitments without expanding the deficit, spurring a hunt for options that spare household earnings from direct strain.

Among the options on the table is a modest hike to the corporation‑tax rate levied on large enterprises. Slightly lifting the profit charge would unlock a substantial revenue source while reassuring investors that the tax climate stays broadly steady for smaller companies and start‑ups.

A further route being explored is to tighten capital‑allowance rules, which at present permit firms to deduct part of their investment outlay from taxable profit. Modifying the rate or breadth of these deductions would promote a more exact targeting of reliefs and could draw extra revenue from sectors that profit most from accelerated depreciation.

Policy advisers are also looking at reinstating or widening a windfall tax aimed at industries that have seen sudden profit spikes, like energy firms or major digital platforms. The charge would be presented as a short‑term tool to redistribute surplus gains generated by market conditions rather than routine business results.

Lastly, the Chancellor could pursue modest reductions or efficiency drives in public spending, especially where savings are possible without eroding essential services. Streamlining procurement, reviewing legacy programmes, or adjusting public‑sector pension schemes are among the measures that might free up cash for other priorities.

Analysts caution that any blend of these instruments must be weighed against political realities and the wider economic backdrop. Although the Labour government has vowed to shield low‑ and middle‑income households from tax increases, the precise mix of corporate‑tax tweaks, targeted levies and spending reforms will dictate the fiscal story as the Budget approaches and affect the party’s ability to finance its agenda.