When Andy Burnham took over as prime minister, there was one key question on many people’s minds – who will take over from Rachel Reeves as chancellor and lead crucial decisions about spending and taxation?

On July 20th, Burnham announced John Healey as his choice. Now, the new chancellor has set a date for his first Budget, and on October 28th, he will unveil his plans, many of which could affect your finances.

Who is John Healey and what will his first Budget look like?

John Healey has held several cabinet positions since being elected as an MP in 1997. The new chancellor has been in parliament for decades, having been elected to represent Wentworth in 1997 under Tony Blair’s government.

Since then, he has been a mainstay of the Labour Party, holding several key cabinet positions:

• Shadow Health Secretary from 2010 to 2011
• Shadow Housing Secretary from 2015 to 2020
• Secretary of State for Defence from July 5th 2024 to June 11th 2026

Healey’s position as defence minister ended abruptly as he was among the high-profile ministers to step down in the lead-up to Keir Starmer’s resignation, after a dispute over defence funding. When he was first an MP, Healey also served as a parliamentary private secretary to the chancellor from 1999 to 2001, so he has some experience in the role.

Healey’s priorities for the Budget echo Andy Burnham’s sentiments

When he announced the date of his first Budget, John Healey talked about his priorities as chancellor. He said that the Budget would be built on “fiscal discipline” and echoed the prime minister’s promises to “kickstart growth in every postcode” and “move money and power out of Westminster”.

Healey also committed to sticking to previous Chancellor Rachel Reeves’ fiscal rules. These guidelines state that all government spending must be funded by tax revenues and other income rather than by borrowing by 2029/30.

This means that if Healey wants to continue with the cost-of-living measures announced so far and push for further investment in public services, he will need to raise taxes or make savings elsewhere.

The chancellor has told government departments to find money in their budgets

In a letter to government departments, Healey stressed that there would be no additional funding to cover some of the policies already announced. He wrote that they needed to be “disciplined on spending, looking at the tough choices and being ready to shift funding away from unproductive or legacy programmes that no longer reflect this administration’s priorities.”

This might suggest that Healey is hoping to fund many of the government’s new policies from existing budgets. However, Andy Burnham’s devolution plans are likely to be costly. Also, Healey previously resigned over a lack of defence funding, so he may well want to increase spending in that area.

So, there is a significant chance that the chancellor will seek to raise more revenue through taxation.

There is speculation about changes to Inheritance Tax and Capital Gains Tax

Andy Burnham has previously said that he feels income is overtaxed and wealth is undertaxed. This has led to widespread speculation that he will make changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT) to address the perceived imbalance.

For instance, the Chancellor could announce that CGT rates will increase to match Income Tax rates. Alternatively, Healey could reduce the Annual Exempt Amount – the level of profits you can make each year before paying CGT.

Where IHT is concerned, Burnham has previously suggested the idea of replacing the tax with a 10% flat-rate levy on all estates. Should this happen, you may need to reconsider your estate plan.

It’s important to avoid making reactive decisions in the lead-up to the Budget

Only time will tell what changes John Healey announces on October 28th, and it’s important to avoid making any decisions before then. While it may be tempting to try to get ahead of tax changes by adjusting your financial plan, this could lead to worse long-term outcomes.

Once we know what is going to change, we can help you navigate new legislation and ensure you remain on track to meet your goals, get in touch to chat with one of our expert financial advisers.