***The 2026 Budget - what to expect*** FISCAL HEADROOM * John Healey is expected to lower the fiscal headroom from £23bn to around £15bn after economic hit caused by Iran war * Ministers fear fresh military strikes by the US against Iran in wake of mid-terms will render OBR forecasts obsolete within days - worse is to come ENERGY BILLS *Healey will extend the warm homes discount for families on benefits, giving them another £100 off their energy bills * But households not on benefits will bear the full brunt of the rise in January, when bills are due to go up by 27% to an average of £2,192 * Gas standing charges will be scrapped next year, saving £27 on a typical bill although those with larger homes who use more energy will pay more * Healey will announce long-term plans to move more green levies off energy bills in a bid to reduce them 'for good * He's also expected to announce long-term plans to remove the link between gas prices and electricity prices FUEL DUTY * The fuel duty freeze - which was due to end in January - will be extended to help with soaring prices at the pumps BANKING TAX * The biggest 'revenue raiser' in the Budget. Healey has been lobbied to restore the 8% surcharge on corporation tax, which would raise £2bn ONLINE RETAILER TAX * Online retail giants like Amazon, eBay and Temu will be made responsible for collecting tax from retailers selling on their platforms FAMILY BUSINESSES * Thousands of high-street shops, cafes, pubs and hairdressers will no longer have to pay business rates. Move funded with online retailer tax MINIMUM WAGE * The living wage, paid by older workers, and the national minimum wage, paid by those aged 18 to 21, will increase by 3.9%. Healey has chosen to stop the huge rises in the minimum wage amid concerns it was pricing young people out of work PENSIONERS * Healey will announce plans to shield 1million pensioners from paying income tax * The state pension is due to rise by 3.9%, taking 1million people with low incomes above the income tax threshold * Healey will introduce a new tax allowance for low-income pensioners * He has also decided not to reduce the tax-free pensino lump sum DEFENCE SPENDING * Healey's immediate priority is filling £4.7bn hole in the defence investment plan. Cuts expected to departmental budgets elsewhere * He is also expected to announce additional borrowing to fund government investment vehicles, which will then be used to fund defence * But he WILL NOT set out a timeline for hitting the 3% defence spending target. That will come in the spending review next year HELP TO BUY * A revived Help to Buy scheme called Your First Home * It will offer first time buyers a 20% equity loan to help them buy a new-build home, with a minimum deposit of just 2.5% * The earnings cap will be set at £140,000 in London and £110,000 outside London RECORD TAX LEVELS * The OBR is expected to once again say that the tax burden will rise to another post-war record * It's being driven by fiscal drag. Half a million people will be dragged into paying the higher rate * The freeze - which is pencilled in for more than a decade - is effectively the single biggest tax rise in history OBR forecasts * They will highlight the huge uncertainty caused by the war in Iran. Ministers think it could make the OBR forecasts obsolete within weeks * The tax revenues underpinning the Budget assume that Rosebank will be given the go-ahead, despite Cabinet splits on the issue WHAT ISN'T IN IT * Healey has rejected calls from colleagues to increase Capital Gains Tax amid concerns that doing so would damage growth and end up reducing tax revenues * Major welfare reform will wait until after the Milburn review, which is coming after the Budget. It will require significant upfront investment in employment support * Defence spending - the big decision has been deferred until the spending review, expected in Autumn 2027

John Healey’s first budget will assume a new oilfield in the north Atlantic will be approved despite deepening cabinet splits on the plan, @Geri_E_L_Scott reports The Times has been told that Treasury calculations, which will be included in official budget documents and forecasts from the Office for Budget Responsibility (OBR) on Wednesday, assume that the Rosebank oilfield will be approved and will generate significant tax revenues Adura, the project’s developer, included projections of oil produced from Rosebank in submissions to help the government determine expected oil and gas tax receipts. The chancellor and Jonathan Reynolds, the business secretary, are understood to support Rosebank because of its potential to protect jobs, attract investment and generate tax. It has been reported that Andy Burnham is also keen to approve drilling at the site. However, Miatta Fahnbulleh, the energy secretary, is leaning towards rejecting the project because of its environmental impact while Ed Miliband, the foreign secretary, is also understood to oppose it. thetimes.com/uk/politics/art…