Thursday 17 September 2026Tax The Budget

Should the government rule out tax rises before the Budget?

In 30 seconds

The ask

Rule out tax rises at the 28 October Budget.

The answer

No. Burnham won't write the Budget in advance.

My verdictPartly right

Deny the exit tax rumour, but don't rule out every tax rise.

Why

What happened

In his first big speech as shadow chancellor, Andrew Griffith called on Prime Minister Andy Burnham and Chancellor John Healey to rule out tax rises at the Budget. He singled out small businesses, the self-employed and a rumoured "exit tax" on people leaving the UK, and announced a Conservative review of small-business tax, due to report in December.

Labour said the Conservatives were promising tax cuts without saying how they'd pay for them or which services would be cut. Burnham has repeatedly refused to rule tax rises out, saying the war in the Middle East makes this a challenging Budget. The same day, the Bank of England held interest rates at 3.75%.

What's really going on

In the weeks before a Budget, rumours about tax changes can change what people do. Britain saw a rush of pension lump-sum withdrawals before the October 2024 Budget on a rumour that didn't come true. Talk of an exit tax could do the same to wealthy people's plans to stay.

But the Chancellor's room to promise anything is small. Inflation is rising, energy prices are up because of the war, and the Bank isn't cutting rates, so there's no relief coming from cheaper borrowing. Under the , any shortfall has to be met by higher taxes, lower spending, or bending the rules. Ruling out one of those means leaning harder on the other two.

The strongest case on each side

For ruling it out

Certainty has value. Firms hold back on hiring and investment while they wait to see what a Budget holds.
The tax burden is already at a post-war high, and small firms carry a heavy paperwork load on top.
A firm promise forces the Treasury to look for savings first, rather than reaching for taxes.

Against ruling it out

Six weeks out, with inflation rising, it means any gap is filled by cuts or borrowing. Neither has been named.
Promises not to touch the headline taxes led governments to freeze tax thresholds instead, which raises money without anyone announcing a rise.
The Conservative position comes without costings, which Labour was right to point out.

My verdict: partly right

Griffith is right that uncertainty costs something, and the government has let the rumours run for too long. Ruling out all tax rises wouldn't remove that cost. It would move it to spending cuts or extra borrowing, and neither Griffith nor the government has said which.

I'd be equally critical of the government's reply. Burnham's answers have leaned on Griffith's part in the 2022 mini-budget rather than his argument, and "difficult decisions" tells people nothing about which ones. Neither side is telling voters what the real choices are.

What I'd do instead

Rather than promise what won't happen, tell people what the real choices are. Three steps, most urgent first.

Rule out an exit tax this week

If the Treasury isn't planning one, it should say so on the record now, rather than let the rumour run until 28 October.

How it would work: The Chancellor writes to the confirming there will be no exit tax at this Budget. One paragraph, on the record.
Who it affects: Wealthy, internationally mobile people deciding where to be tax resident, many of them already weighing the end of the in April 2025.
What it costs: Nothing now, but it gives up a real option. Canada, Australia and Norway all tax some gains when people emigrate, so this isn't a fringe idea.
The risk: If the gap turns out larger than expected, the Chancellor has one fewer lever, and critics will say the government is protecting the wealthy.

Publish a pre-Budget options paper

Four weeks before the Budget, set out the size of the gap and the realistic ways to close it, with what each would raise and who would pay.

How it would work: The Treasury lists the tax and spending options it is considering, each with a rough yield or saving. Much of the costing exists already: HMRC publishes estimates of what standard tax changes raise.
Tried before?: Yes. Ireland publishes costed tax options ahead of every Budget. Britain had a Pre-Budget Report each autumn from 1997 to 2009.
What it costs: Very little. The Treasury does this analysis anyway; this simply publishes it.
The risk: People act on changes they can see coming, such as selling shares before a capital gains rise. The fix is to say that any change on the list would apply from the day the paper is published.

Pause Making Tax Digital and bring back tax simplification

The cheapest, most sensible idea in Griffith's speech. The government should take it rather than dismiss it because of who said it.

How it would work: Hold the threshold at £50,000 for now, delaying the extension to sole traders and landlords with income over £30,000 in April 2027 and over £20,000 in April 2028. Re-create an independent Office of Tax Simplification, abolished in 2023.
Who it affects: Self-employed people and small landlords facing quarterly digital reporting. The £20,000 stage alone would bring in around 900,000 more people.
What it costs: HMRC expects the scheme to cut errors and bring in more tax, so a pause gives some of that up. The Treasury should publish how much.
The risk: Businesses and software firms that have already prepared lose out, and a pause can quietly become permanent.

The trade-off

A published list invites every lobby to fight every item, and the Chancellor loses the element of surprise. I think that's worth it. Pension withdrawals jumped before the 2024 Budget on a rumour that never came true, so secrecy already has a cost.

How we'd know it worked

No rush of pension withdrawals or residency changes in the weeks before the Budget, and nothing announced on 28 October that wasn't on the published list.

What to watch

Whether the Treasury kills the exit tax rumour before the Budget.
The 's forecast on 28 October, which sets the real size of the gap.
The Conservative small-business tax review in December, and whether it comes with costings.

Each of these is logged as an open call on my track record.