What is the Budget and what could be in it?

Key points

• Chancellor Healey will deliver the Budget statement to MPs in the House of Commons, with the OBR publishing an economic forecast alongside it.
• Healey has refused to rule out tax increases after saying government borrowing costs are at historic highs.
• Speculation includes higher bank taxes, details of the Your First Home scheme, and a higher threshold for the High Value Council Tax Surcharge being ruled out.

Chancellor Healey will present the Budget to MPs in the House of Commons, setting out plans for raising or lowering taxes. The Treasury will publish details of the measures and their costs, and the independent Office for Budget Responsibility will release an assessment of the UK economy and a forecast.

Healey has refused to rule out tax increases after acknowledging government borrowing costs are at historic highs. He and Prime Minister Andy Burnham face a difficult balancing act, trying to offer more support to households and meet defence spending commitments while sticking to Labour's manifesto tax pledges and the government's fiscal rules.

Fiscal rules and headroom

The previous chancellor, Rachel Reeves, set two main rules that the new leadership has vowed to follow: not to borrow to fund day-to-day public spending by the end of this parliament, and to get government debt falling as a share of national income by the end of this parliament.

In March, the OBR calculated that the first rule would be met with headroom of £23.6bn, but this is expected to have shrunk. KPMG believes the buffer could have fallen to £12bn, while the Institute for Fiscal Studies estimates it could be £20bn.

historic highs

— Healey

Speculation on Budget measures

Bank bosses have told the BBC they expect Healey to raise taxes on the sector. Further details on the Your First Home scheme are expected, with the eligibility threshold now set at £110,000 outside London and £140,000 in the capital, the BBC understands. Changes to Capital Gains Tax have been ruled out.

Pensioners on low incomes are expected to be shielded from income tax through a new personal allowance. Online retail giants such as Amazon and eBay are expected to be made responsible for collecting tax owed by traders using their platforms, according to The Times. Healey is also expected to add another £1bn to the £39bn planned spend on social and affordable housing in England over the next decade.