What Burnham means for your money - from income tax to pensions

Andy Burnham has made a third policy announcement to help bring down costs - after dropping hints there would be more to come.

The new prime minister has confirmed a 20% business rates reduction for pubs, clubs and music venues next year, a VAT cut on electricity bills later this year and a £2 cap on bus fares at the start of 2027 - we have more details on all those changes below.

But what other differences could he make to the money in your pocket?

Income tax

Andy Burnham said last week that the ongoing freeze on income tax thresholds was the topic he "heard most on the doorsteps" while campaigning in the Makerfield by-election.

He then told reporters on Monday that "all of this will be looked at" in the next budget but acknowledged there would be "significant consequences" to lifting the threshold - i.e lots of money lost for the Treasury.

As the week progressed, he confirmed: "There is no commitment at this point to change, but we will look at that at the budget."

The threshold at which point people start paying income tax is currently £12,570 - it's been frozen there since 2021.

Thanks to higher inflation pushing up wages but not the thresholds, more people have been dragged into paying higher rates of tax.

There are 31.4 million basic-rate taxpayers in the country, according to the latest HMRC figures. That's a 15% increase in the number of people paying income tax at 20% since tax bands were frozen at 2021 levels.

A total of 7.7 million people are expected to pay the higher rate this year - a million more than two years ago.

A further 1.3 million people are set to pay the 45% additional rate - far more than the 263,000 people paying it in 2010-11 when it was first introduced.

If the threshold had risen in line with inflation, it would be about £16,072 next year and £17,380 by 2029-30, according to analysis by AJ Bell.

If Burnham were to increase the personal allowance to £16,000, it would cost around £35bn, the investment platform said.

Raising the allowance by just £100 would cost roughly £1bn a year.

No wonder he stressed this week: "So no commitment. No unfunded promise.. there is no commitment at this point to change, but we will look at that at the budget."

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A new 50p top rate of tax?

Asked if the reintroduction of a 50p top rate of income tax was one possible means of helping to fund the measure, Burnham has said: "I think that would be just premature to say that. I've barely got my feet under the table."

He has committed to Labour's 2024 manifesto, which pledges not to raise the main rates of income tax, VAT or national insurance, so that would rule out introducing a 50p top rate.

Business rates

Business rates will be cut by 20% for pubs, clubs and live music venues from next April, which the government says will save the typical pub £1,100.

It will benefit nearly 32,000 hospitality venues.

Business rates relief on what ministers are calling "anti-social businesses", such as vape shops, will also be reviewed.

Ministers also say they will crack down on businesses that sell through online marketplaces but do not pay their proper tax.

During his Makerfield campaign, Burnham also said he would increase the threshold at which small businesses start paying the tax, which has been frozen at £12,000 since April 2017.

Read more:
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Capital gains tax

While Burnham has made the manifesto commitment, he has previously made it clear he believes wealth in the UK is undertaxed. This has fuelled rumours he could make changes to capital gains tax.

CGT is charged on the profit you make when selling, gifting or disposing of an asset that has increased in value, such as shares, property or valuable possessions. You pay tax on the gain, not the sale price. Basic-rate taxpayers generally pay 18% and higher-rate taxpayers 24%.

One of the changes suggested has been to hike the CGT rates to make them more closely aligned with income tax rates. Another has been to scrap an allowance known as the uplift-on-death rule which helps some people to pay less CGT on assets they inherit, such as a family home.

Both of these changes have been backed by Louise Haigh, a close ally of Burnham and the new first secretary of state, chancellor of the Duchy of Lancaster and minister for the Cabinet Office.

Energy bills

From 1 October, VAT will be removed from household electricity bills for six months. Energy suppliers are expected to pass the reduction on to all customers, including those on fixed tariffs.

VAT makes up roughly 5% of our energy bill, and the cut is expected to take around £45 off the yearly Ofgem price cap, which sets the maximum rates suppliers can charge.

MoneySavingExpert's Martin Lewis believes Britons "won't feel much benefit" from the cut, considering it will be introduced on the same day as the new price cap.

"The energy price cap on 1 October for electricity and gas is currently predicted to rise 3.1%, which on typical bills is over £50 on an annualised basis (and that's likely to be in the right ballpark as we're a decent way through the analysis period)," Lewis said.

"So the VAT cut gain over six months is mostly eaten up by that. Especially as the prediction is a further rise in January (though that is far more crystal ball gazing)."

The VAT cut, estimated to cost £850m, will be funded by the scrapping of the previous government's £1.8bn digital ID programme, Burnham said.

It's worth noting Sir Keir Starmer's government was already working on a package of support for household energy bills to help address expected increases over the winter.

Pensions

Burnham has publicly backed the pension triple lock, saying he will abide by the promises made in Labour's 2024 manifesto.

But, behind the scenes, he will be hearing loud and clear that reform can't be put off forever - including from his own inner circle.

Two of his advisers - former Office for Budget Responsibility chair Richard Hughes and economist Lord O'Neill - have both called for the triple lock to be axed to save the government billions of pounds.

Under the triple lock, the state pension rises each year by whichever is the highest out of wage growth, inflation or 2.5%.

When it was introduced in 2012, estimates suggested it would cost around £5.2bn a year by 2029-30 and see the state pension rise by an average of 0.2 percentage points above earnings growth.

But inflation has been significantly more volatile than expected - and this has triggered some significant annual uplifts.

The Department for Work and Pensions expects state pension spending to hit £169bn by 2030.

Despite the criticism from experts, scrapping the policy, or even changing it, is not popular with the voting public - which might explain why no prime minister wants to touch it.

A YouGov poll from April found that 37% of people opposed making any changes to the triple lock policy, while only 26% supported changes.

We previously looked at some of his options for the state pension here.

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Other state benefits

Burnham has said he wants to "sustainably" reduce the amount the government spends on welfare.

He's also promised to help more young people into work, build more council homes and create a more "preventative state", investing in people's success rather than paying for failure.

"That is the fair and sustainable way to bring the welfare bill down, to meet our fiscal rules and to honour our commitments on defence to our international partners," he said.

Bus fares

A £2 cap on single bus fares will be reintroduced for a year from January.

It will be backed by £500m of funding, which will be reallocated from money earmarked for international climate finance as well as existing transport funding.

The cap was first imposed by the Conservatives in early 2023 but was increased to £3 under Starmer's Labour in 2025.

Some areas chose not to increase the cap, including Greater Manchester, which Burnham ran until last month.

Transport for London buses operate on a different fare structure and already charge less than the cap at £1.75 for each single journey.

Rent controls

Burnham has said he is looking at rent controls as a way of helping with the cost of living squeeze.

Speaking to reporters in the Downing Street garden, he was asked if this would be part of his cost-of-living package.

He said he was "looking at all of those things" but stressed no final decisions had been made.

"We're just finalising the details, so it's premature to say it will be any one of those particular things. We just want to do some things that people will feel and feel quite quickly," he said.

Burnham had called on Starmer to impose rent controls during his time as Greater Manchester mayor.

In February 2023, he signed an open letter calling for an immediate freeze on private-sector rents until the cost of living crisis was over.

Council tax

Burnham has been a long-time advocate of council tax reform.

During his recent campaign, he called it "highly regressive" and said its 1991-based valuations were "not justifiable".

Burnham is listed as a supporter of a proposal put forward by the campaign group Fairer Share, which wants to replace council tax and stamp duty with an annual property tax that's equivalent to 0.48% of a home's value.

If this were to go ahead, it would mean property tax of £1,440 would be payable on a house valued at £300,000.

Burnham has also expressed support for land value tax, an annual tax based solely on the value of the land itself.

This would replace stamp duty, which is paid when you buy a new property or land.

(c) Sky News 2026: What Burnham means for your money - from income tax to pensions