Following Andy Burnham’s arrival in Downing Street as Prime Minister, he’s appointed a new Chancellor of the Exchequer, John Healey. In an appointment that surprised commentators, it marks the start of another new phase for UK tax policy; for now we’ll have to wait to see what impact the change in the top two governmental posts may have. 

Who is John Healey?

John Healey is a long‑standing Labour MP who has held several ministerial roles previously, including posts at the Treasury under Tony Blair. More recently, he served as Defence Secretary for two years, where he pushed for increased long‑term spending on defence. He resigned when the Treasury refused to commit to raising UK defence spending to 3% of GDP by 2030.

That mix of experience suggests he’s familiar with the mechanics of tax policy and HMRC, while also being comfortable arguing for significant investment in priority areas.

A change in Chancellor, not yet a change in the rules

Healey takes over from Rachel Reeves, who was closely associated with the previous PM’s economic stance. Her policy decisions included extending the freeze on the personal allowance and higher‑rate thresholds, and changes to areas such as employer National Insurance and winter fuel payments.

Any changes Burnham and Healey want to make will need to go through the usual Budget and parliamentary process. There’s likely to be a period of announcements and ‘policy signalling’ before anything is confirmed, particularly as Parliament is just heading off to its Summer Recess.

We’ll of course be watching development carefully and will explain the practical impact as soon as details of any changes are available.

Personal allowance – will the freeze end?

One of the talking points around the new Chancellor and new PM is the personal allowance which has remained frozen since the days of Rishi Sunak. The main tax‑free allowance has been held at £12,570 for several years, rather than increasing with inflation which has quietly pulled more people into the tax net.

The new Prime Minister has already indicated that he’d like to see the personal allowance increased. While this is far from a guarantee, it does suggest that the freeze may not continue indefinitely.

If the allowance is raised:

• Some lower‑income taxpayers could see a small reduction in their tax bills.
• The numbers of people moving into tax or higher bands could ease slightly.
• Any changes would need to be balanced against the government’s wider spending plans.

As ever, until we see firm proposals, it’s important not to assume that this change will happen or build it into long‑term plans.

Big promises, tight constraints

The new PM came into office with hold-over commitments not to raise the headline rates of income tax, National Insurance or VAT. These promises will restrict the new Chancellor’s options for raising extra revenue through the main taxes.

In practice, this often leads Chancellors to look at narrower measures instead, such as:

• Adjustments to reliefs and allowances.
• Targeted changes to specific sectors or types of income.
• Compliance and enforcement activity (for example, tackling avoidance or improving collection).

For business owners, the message is familiar: major rate rises may be off the table, but smaller, technical changes can still have a meaningful impact.

What could the new Chancellor mean for small businesses?

While we obviously don’t yet have a detailed programme from John Healey, there are some likely areas of focus:

• Stability with a twist – The government will be keen to present a stable environment, but may well pair this with targeted tweaks. We’d expect continued emphasis on investment, skills and productivity, potentially supported by tax incentives.
• Focus on ‘fairness’ – Labour has consistently talked about making the tax system ‘fairer’. That may translate into closer scrutiny of how different forms of income are taxed, and of reliefs perceived as benefiting a minority.
• Ongoing compliance pressure – HMRC’s drive to improve compliance is unlikely to weaken. Digitalisation, data‑matching and tackling the tax gap will remain themes, meaning accurate records and timely submissions are as important as ever.

As ever, some changes may create opportunities (for example, new or improved reliefs), while others could increase costs or administrative burdens.

What should you do now?

For the moment, the sensible steps are:

• Continue to plan based on the current rules – Until changes are announced and enacted, your existing tax and business plans remain valid.
• Be cautious about ‘headline’ promises – Political statements often trail potential changes but don’t always translate directly into law.
• Keep up to date – We’ll keep a close eye on forthcoming announcements from the Treasury and HMRC. Once we have any concrete details, as usual we’ll explain what they mean in plain English and outline any actions we’d recommend.

If you’re concerned about how future tax changes might affect your business, please get in touch. Over time, we can look at your plans in light of both the current rules and the direction of travel we’re seeing from the new Chancellor.