Treasury Minister Chris Thomas MHK emphasised financial discipline and investment in services alongside a substantial rise in the personal allowance while unveiling his first Budget in Tynwald this morning (Tuesday 17 February).
Referring to this year’s Budget slogan, Minister Thomas said:
‘It is a privilege to stand in this Honourable Court today to present to the people we represent the 2026 Isle of Man Budget and five-year financial plan — a budget and plan for Stability, Security and Confidence.
‘This financial plan sets a pathway towards reducing the Island’s reliance on general reserves despite a continuing need for significant public expenditure.’
Monthly scrutiny panels and the forthcoming introduction of priority-based budgeting were highlighted as ways of maintaining stability and driving greater efficiency in Government spending into the future.
Setting Departmental pay and non-pay budgets below inflation expectations is expected to deliver results more immediately.
‘I estimate that this means £5.6m of savings will be achieved [in 2026-27] and £29m over the medium term if there is adherence to the plan,’ the Treasury Minister informed Members.
While Government spending continues to rely on the use of reserves to fund spending, this is forecast to diminish over the next five years, with a surplus forecast from 2028-29 onwards.
Despite their planned use, the Island’s reserves are forecast to grow from £1.95 billion in the coming financial year to £2.22 billion in 2030-31.
The Department of Health and Social Care (DHSC) will receive an additional £45m, driven by demand for services delivered by Manx Care and increasing the DHSC annual budget to £412m. This rise marks the first departure from the funding formula set out following the Independent Review of the Isle of Man Health and Social Care System, leading Minister Thomas to warn:
‘Healthcare is important but the sustained and substantial increase in costs in recent years remains a significant risk to the achievement of our medium-term financial plan.’
Further investment in services will see £4.4m more for the childcare strategy, vocational training assistance and apprenticeships and £2.8m for the continued provision of vital infrastructure and transport services.
An additional £5.8m will be available to bolster Island security, while community safety will be supported through capital funding committed to the Island’s emergency services for vehicles and equipment.
The Treasury Minister said:
‘This additional revenue budget and capital funding should provide stability and security in line with the 2025 prioritisation of the Island Plan.
‘But we also need a solid boost of confidence. Confidence to secure jobs, confidence to increase private investment and confidence to export and grow the economy.’
Turning to a widely anticipated rise in the personal tax allowance, the Treasury Minister announced:
‘[It] will increase most taxpayer’s take-home pay, taking about 3,600 people out of the tax net, and is aimed to boost disposable income and the local economy. It will make many taxpayers nearly £500 better off each year.’
He added:
‘I am pleased to announce an increase in the personal tax allowance from April of £2,250 so that individuals will start paying on annual earnings over £17,000 and jointly assessed couples from £34,000. This is triple the £750 proposed until the budget revisions took place a few weeks ago, and that proposed £750 rise was already triple the only other rises since 2021.’
Pensioners will continue to benefit from the Triple Lock commitment and will see an increase of 4.8% in their pensions. The Basic State Pension will increase to £184.90 a week and the Manx State Pension to £263.55 a week.
