With Andy Burnham becoming Prime Minister and appointing John Healey as Chancellor of the Exchequer, attention is already focused on what the change in leadership could mean for the UK’s tax system.

Sally Appleton is partner and head of the Leeds office at accounting and business advisory firm, Saffery and has highlighted several key areas that could affect both businesses and individuals.

At this stage, we have seen a series of relatively small, specific announcements, including that VAT is to be removed from household energy bills from 1 October - an early indication that targeted measures to combat the cost of living will be high on the agenda. Despite this, more questions than answers remain.

While there has been considerable speculation about potential tax changes, the Prime Minister and Chancellor inherit a challenging fiscal position alongside a government programme that is already progressing with several tax reforms. For businesses and individuals alike, those existing changes may prove more important in the short term than any future announcements.

One of the clearest signals from Mr Burnham has been his commitment to Labour’s 2024 manifesto pledge not to increase the main rates of income tax, VAT or employee National Insurance contributions (NICs). He has also indicated he intends to continue operating within the government’s fiscal rules, limiting some of the options available if additional spending is planned.

Any major tax announcements are unlikely to be immediate. Significant fiscal events are generally accompanied by forecasts from the Office for Budget Responsibility (OBR), meaning a Budget later in the autumn is the most likely opportunity for wider reforms. However, more targeted tax measures could emerge sooner.

Key tax areas to watch include the income tax personal allowance. Mr Burnham has said he is looking at this, noting that lower earners have been particularly affected by recent threshold freezes. He has also suggested he wants to reconsider the increase in employers’ NICs introduced in Labour’s 2024 Budget, raising speculation that these changes could be reversed or amended.

Business rates are another area to monitor. Mr Burnham previously expressed support for a 20% reduction for pubs, clubs and music venues and, on 23 July, announced that this would commence from April 2027. Additional changes to business rates are possible.

Capital gains tax (CGT) is another area attracting speculation. While no formal proposals have been announced, any move towards higher CGT rates or closer alignment with income tax rates could influence business disposals and succession planning. However, aligning CGT with income tax on business disposals could discourage owners from selling trading businesses, potentially affecting investment and growth. Inheritance tax (IHT) agricultural property relief (APR) changes introduced in April 2026 may also come under review.

While attention is focused on the new Prime Minister and Chancellor, it is important not to lose sight of the substantial tax changes already underway.

These include large multinational groups facing new International Controlled Transaction Schedule (ICTS) reporting requirements from January 2027, while the UK’s Carbon Border Adjustment Mechanism (CBAM) will introduce additional reporting obligations and potential costs for businesses importing certain carbon-intensive goods.

Other forthcoming measures include higher tax rates on savings and rental income from April 2027, inheritance tax applying to unused pension funds and certain pension death benefits, mandatory payroll reporting for many employee benefits, changes to pension salary sacrifice from April 2029, and proposals for more timely Income Tax Self Assessment payments.

The government is also consulting on significant reforms to the taxation of company distributions, capital returns and demergers.

A change of Prime Minister and Chancellor always creates uncertainty. However, there is currently little evidence that immediate, wide-ranging tax reform is planned. For now, businesses should focus on the changes already scheduled while keeping a close eye on the autumn Budget, when the government’s longer-term tax priorities are likely to become much clearer.