[VIDEO] Andy Burnham Is Prime Minister: What Could It Mean for Your Finances?

Andy Burnham officially became the UK’s new Prime Minister on 20 July 2026, replacing Keir Starmer without a general election.

He has promised a “cost of living government” and has already announced several policies affecting household bills, transport and British businesses. However, the biggest financial decisions including possible changes to income tax, ISAs, pensions and investments are still to come.

So, what has actually changed, and what should we be watching?

What has Andy Burnham announced?

Burnham’s first measures have focused on immediate, highly visible support.

The government will remove the 5% VAT charged on domestic electricity from October 2026. It is expected to save a typical household approximately £45 a year.

Single bus fares across England will also be capped at £2 throughout 2027, while pubs, clubs and smaller live-music venues will receive a 20% reduction in business rates from the 2027–28 tax year.

These measures should provide some support, but they are relatively modest individually. Removing electricity VAT, for example, saves the average household less than £4 a month.

The larger question is how Burnham intends to fund his broader plans without increasing borrowing or taxes elsewhere.

Who is the new Chancellor?

John Healey has been appointed Chancellor of the Exchequer. It was a surprising appointment, as he previously served as Defence Secretary, although he also has earlier experience as a Treasury minister.

In his first speech to Treasury staff, Healey promised:

• Fiscal discipline and compliance with the government’s borrowing rules.
• Investment and economic growth across the UK.
• Greater support for British businesses.
• More government procurement from UK companies.
• Further action to make everyday life more affordable.

The government is attempting to combine increased investment with financial discipline. Whether it can deliver both will become clearer when the Chancellor presents his first Budget.

Could income-tax thresholds finally increase?

The personal allowance remains frozen at £12,570, with the freeze currently scheduled to continue until April 2031.

As wages and pensions rise, more people are pulled into paying income tax or pushed into higher tax bands. This process is known as fiscal drag.

Burnham has previously highlighted the effect of frozen thresholds, but increasing the personal allowance would be expensive for the Treasury. A small increase or a decision to end the freeze earlier may be more realistic than a substantial immediate tax cut.

For now, no change has been confirmed.

What about ISAs, pensions and investment taxes?

There has already been speculation about changes to Capital Gains Tax, dividend taxation, inheritance tax and taxes on wealth.

Burnham has previously argued that income generated from work should not be treated less favourably than income and gains generated through wealth. However, that does not mean a new wealth tax or higher Capital Gains Tax has been agreed.

The government must also decide whether to retain the previously announced changes to Cash ISAs and unused pension funds.

Until the new Chancellor says otherwise, existing policies should be treated as continuing. A change of Prime Minister does not automatically cancel previous financial legislation.

This is also why tax-efficient accounts remain important. Investments held inside a Stocks and Shares ISA remain protected from UK Capital Gains Tax and dividend tax under the current rules.