The 2026 Budget proposals have been published today, highlighting that the States are operating a structural deficit – a situation that will continue until tax reforms are implemented. The States are due to agree what those reforms should be next year.
The overall Budget results in an estimated deficit of £48m before investment returns.
Public services continue to experience substantial cost pressures, with the Policy & Resources Committee recommending increases for Committees of £12m above the initial cash limits set despite requests amounting to £28m.
Although the Policy & Resources Committee recognised the merit of the majority of Budget requests, to protect the States’ financial sustainability it is recommending that only those requests which are considered essential, or where costs are unavoidable, are approved in the Budget for 2026, as otherwise the cost increases would be unaffordable.
To help limit the deficit, real-terms increases are proposed in excise duty on tobacco and fuel, tax on real property and vehicle first registration duty. A new duty on vaping liquid in Q3 2026 is also proposed to regulate the use of vaping products and generate additional revenue for the States.
To help address the challenging financial position, savings of £4m – including £2.5m in general revenue expenditure – have also been built into the Budget, with more expected in future years.
Other key proposals within the Budget include:
- Easing pressure on the rental market by removing the 2% additional document duty on buy-to-lets to minimise the loss of properties available to rent;
- A real-terms increase in the personal income tax allowance to £15,200 to help ease the pressure being felt by individuals and households.
Deputy Lindsay de Sausmarez, President of the Policy & Resources Committee, said:
“It’s another tough year in fiscal terms: the 2026 Budget illustrates the very challenging financial position that we are once again in.
“We have known for some time that the combination of the switch to Zero-10 and our changing demographics – the reducing proportion of working age people to retirees, and the increasing health and care needs of our population as we are on average living longer – have profound implications for fiscal balance. Our tax base needs to adapt to the new reality, and work is well underway, leaving no stone unturned to enable the States to agree a definitive way forward next year.”
“Right now, though, we need to make difficult decisions to make ends meet for 2026. To balance the books, we’re proposing some modest increases in some taxes and duties combined with some savings through reductions in expenditure. Committees have not been given all that they have asked for, but we hope our colleagues appreciate the need for fiscal restraint in the current circumstances.”
To download the budget, go to
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