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

Sources say Chancellor John Healey is contemplating a package of fiscal initiatives that could raise extra funds for the forthcoming Budget, all while leaving personal income‑tax rates untouched to safeguard tax brackets favoured by voters.

The drive for additional income arises as the administration faces shrinking fiscal space following numerous big‑ticket spending pledges such as infrastructure works and social initiatives. Treasury insiders are reportedly evaluating ways to meet these commitments without expanding the deficit, spurring a hunt for options that steer clear of putting strain on household wages.

Among the options on the table is a modest hike in corporation tax for large enterprises. Raising the profit levy slightly would unlock a substantial revenue source while reassuring investors that the tax climate stays largely steady for smaller companies and start‑ups.

A further route being examined is the tightening of capital‑allowance rules, which presently permit firms to deduct part of their investment outlay from taxable profit. Modifying the rate or breadth of these deductions would promote a tighter targeting of reliefs and could draw extra revenue from industries that currently reap the most benefit from accelerated depreciation.

Policy advisers are also looking at reinstating or broadening a windfall tax aimed at sectors that have seen sudden profit spikes, for example energy firms or large digital platforms. The levy would be presented as a short‑term tool to reallocate surplus earnings generated by market dynamics rather than regular business results.

Lastly, the Chancellor could pursue modest reductions or efficiency drives in public expenditure, especially where savings are possible without harming essential services. Options such as streamlining procurement, reviewing legacy programmes, or adjusting public‑sector pension schemes could release funds for other priorities.

Analysts warn that any blend of these instruments must be weighed against political realities and the wider economic environment. Although the Labour government has vowed to shield low‑ and middle‑income households from tax increases, the precise combination 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 policy programme.