Budget 2026

Introduction

‘Budget 2026’ set rates of taxation for the public and spending limits for States committees for next year. It will be debated at a States meeting that starts on Tuesday 4 November 2025.

The headline news is:

it’s a ‘holding budget’ – new deputies have only just been elected so too early to make big changes
net committee expenditure for 2026 is £678m which is £28m more than the £650m in 2025. That’s inflation, plus 1%
Guernsey is spending more than it’s earning. The budget is in deficit by £48m before investment returns
committees asked for £28m more than P&R had allocated to them. £12m of these additional requests were incorporated.
there’s no mention of GST or corporate tax – a tax-review sub-committee is currently looking at this
it includes £2.5m of a £4m savings target, with more efficiency cuts planned in future years

The main measures in the Budget are:

remove additional 2% document duty for second homes
introduce a new duty on vaping liquid
above-inflation increases on tobacco, fuel, TRP and Vehicle First Registration Duty
personal income tax allowance increases by £600 to £15,200
resumption of the gradual withdrawal of mortgage interest tax relief

However the income-raising measures only bring in an additional £1.2m a year in real terms.

Amendments

To understand an amendment in more detail, click on the amendment number, download it and scroll to the end to read the explanatory note.

Amendment 1:⁠ ⁠Sloan/Camp – Reduce committee spending from 678k to 650k. That is, keep it the same as 2025.
Duo look to freeze States spending next year saving £27m (28 Oct, Bailiwick Express)
Services face severe cuts if Budget freeze is approved (29 Oct, Guernsey Press)

Amendment 2: ⁠⁠Sloan/McKenna – Identify Scrutiny’s budget separately, not combined with another committee.
Bid for itemised Scrutiny costs to improve transparency (1 Nov, Bailiwick Express)

Amendment 3:⁠ ⁠⁠Ozanne/McKenna – Instead of increasing fuel tax by RPIX+1%, lower the increase to RPIX-1%.
1% cut in fuel duty proposed (28 Oct, Bailiwick Express)
‘Smaller fuel duty rise will only save poorest a fiver’ (3 Nov, Guernsey Press)

Amendment 4:⁠ ⁠⁠Matthews/Goy – Retain mortgage interest tax relief at current level, don’t reduce it.
Bid to extend pause in withdrawal of local mortgage interest relief (30 Oct, Guernsey Press)

Amendment 5:⁠ ⁠⁠Dorrity/Sloan – Explore changing the way we forecast Pillar 2 revenue to match Jersey’s more conservative approach.
Pair want States to follow Jersey in forecasting corporate tax revenue (29 Oct, Bailiwick Express).

The story since last Budget

Last year’s budget was much more significant. In it, Deputy Trott proposed to increase income tax by 2% to raise funds while Guernsey was preparing for GST. This was rejected, although preparing the ground for GST-plus was approved. Despite no significant immediate revenue-raising measures being agreed, the £650m of committee spending was voted through, leading P&R to talk of needing an ’emergency budget’ in the new year.

The emergency budget did not materialise. Instead, P&R submitted a ‘Major Projects Portfolio Review‘ for debate at the 19 Feb 2025 meeting. This was a green paper so could only be discussed, not amended. In it, P&R made clear that the next States would have just £150m to spend on £1bn of major projects. P&R also proposed a Fundamental Services Review to decide which services were vital for the States to provide and which could be delivered outside the States or stopped altogether.

This services review was not started before the States term ended. The Budget states that ‘reviewing services from the bottom up’ has now been incorporated into the work of the Chief Exec (Boley Smillie) and a savings target of £4m has been agreed for 2026, of which £2.5m has been included in the revenue part of the Budget (see 6.87-6.92). [This paragraph corrected on 26/10 – it previously stated that there had been no news of the Review since February]