Treasury Minister Chris Thomas has delivered his first Budget speech in Tynwald, setting out the Isle of Man Government’s financial plans for 2026 and the next five years.

Presenting what he described as a Budget focused on ‘stability, security and confidence’, he confirmed a significant rise in the personal tax allowance, additional funding for healthcare, and measures aimed at improving public sector efficiency.

Below is the full speech as delivered in Tynwald. We’ve organised the speech under headings to make it slightly easier to follow...

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.

I for one value every pound of the public’s money that we are considering spending to finance public services.

Value for other people’s money is what this budget is about - to provide stability and security in our public finances.

In that spirit, this financial plan sets out a pathway towards reducing the Island’s reliance on general reserves despite a continuing need for significant public expenditure, overcoming the structural deficit in public finances through cost improvement and efficiency measures. More about that later.

Government revenue spending for 2026/27 is budgeted at £1.47 billion and includes an additional investment in public services of £83 million this coming year.

This year’s budget adds an extra £45 million for healthcare to make the annual budget £412 million, growing to a planned £483 million over the five-year Medium Term Financial Strategy period, and £123 million more than it was in 2022/23.

The increase in funding is driven mainly by mandate funding for Manx Care, marks the first departure from the post-Sir Jonathan Michael funding formula and is £32 million above the anticipated 2026/27 level in the 2025/26 Pink Book.

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.

There is also £4.4 million more for the childcare strategy, vocational training assistance and apprenticeships, an additional £5.8 million to bolster Island security, and £2.8 million for the continued provision of vital infrastructure and transport services.

Three quarters of the extra revenue funding departments bid for has been approved by Treasury, as shown in the bid documents published concurrently with the other budget papers for the first time this year.

For 2026/27, capital expenditure is estimated at around £85 million, combining the Government’s Capital Programme funded through the Capital Financing Reserve and borrowing by Manx Utilities of over £35 million from the Consolidated Loans Fund, principally for electricity generation, regional sewerage, wastewater and water.

These investments are aimed at maintaining national infrastructure, investing in community safety and delivering efficiencies to increase public sector productivity.

Isle of Man Airport will see £660,000 for modernisation and refurbishment of the main terminal building, £335,000 for maintenance and improvements to the control tower and £200,000 in development funding to progress plans to extend the passenger holding area.

£8.5 million will be transferred to the Housing Deficiency Fund this year, and the same amount in each of the following four years, to support local authority housing schemes. The Housing and Communities Fund will receive an additional £1 million to support homelessness work and other activity of the Housing and Communities Board.

Existing funds for transforming the health service and supporting agriculture will both increase by £5 million, with £2 million available to maintain and replace buildings and property in education.

More than £2.6 million will be spent over three years upgrading and modernising facilities at the National Sports Centre, with £700,000 available for public rights of way improvements.

Community safety is supported by £4.1 million over two years for Police and Fire and Rescue Service vehicles, plus £1.9 million for the Ambulance fleet. A further £2.5 million over five years will replace other emergency service equipment including Civil Defence assets.

The Transformation Fund includes an additional £2.5 million for efficiency schemes and £5 million in the Digital Projects Fund for projects under £500,000 to improve service delivery.

The Project Development Fund will receive a further £2 million to complete design and feasibility work on major capital schemes, including school investments in Castletown, Douglas and Peel, the proposed Manx Care Record, emergency services facilities, highways, dredging, waste and digitisation projects.

This additional revenue and capital funding promotes stability and security in line with the Island Plan, with its emphasis on port security, energy supply, connectivity, economic growth, financial discipline, efficiency, vibrant communities and housing.

But we also need confidence – confidence to secure jobs, increase private investment, export and grow the economy.

That is why I added confidence as the third byword of this year’s budget title.

To encourage confidence, the Chief Minister and I signalled a substantial rise in the personal allowance alongside slowing the minimum wage rise and cancelling previously proposed adaptation measures.

The proposed rise will lift about 3,600 people out of the tax net and make many taxpayers nearly £500 better off each year.

I am pleased to announce an increase in the personal tax allowance from April of £2,250 so that individuals will start paying on earnings over £17,000 and jointly assessed couples from £34,000.

This change is expected to reduce income tax receipts by up to £24 million.

The higher rate of income tax, frozen at 21%, will now become payable on income over £23,500.

There are no changes to income tax rates or bands, the tax allowance taper or the tax cap. The TT Homestay tax allowance will rise from £2,350 to £2,500.

Class 1 National Insurance thresholds and limits will increase by 4.8%. The Earnings Threshold rises from £168 to £176 per week. Combined with the personal allowance increase, an individual earning £25,000 will be £518.26 better off annually.

There will be no increase in National Insurance rates and no change to employers’ contributions.

Pensioners will continue to benefit from the Triple Lock, with the Basic State Pension rising to £184.90 a week and the Manx State Pension to £263.55.

Most benefits will increase in line with inflation.

The structural deficit for 2024/25 was £10.7 million, improved from the budgeted £89.7 million. For 2025/26 it is forecast at £72.5 million.

Public finances remain under pressure and the Government will continue to rely on investment returns from reserves during the transition period.

Controlling public expenditure and improving efficiency are crucial.

Healthcare funding continues to rise and any overspend will now be drawn from a Treasury-controlled contingency fund rather than a departmental contingency budget.

The healthcare Financial Recovery Plan aims to deliver £6 million in recurrent savings, alongside a broader cost improvement programme.

Priority-based budgeting and strengthened scrutiny will focus spending on strategic objectives and reduce reliance on reserves.

The first Isle of Man bond maturity repayment is approaching, with the water bond due in March 2030 and the electricity bond in 2034.

The new 15% Domestic Top-up Tax on in-scope multinational enterprises is expected to generate £31 million in 2026/27 and £35 million annually thereafter.

Investment in brownfield regeneration, infrastructure, renewable energy and regulatory standards remains vital.

Stability, security and confidence are what we need for our economy, public finances and public services.

The Island’s economy has remained resilient, inflation is expected to fall closer to 2%, unemployment remains below 1% and income tax receipts are projected to reach £419 million this year.

This 2026 Budget presents a responsible, evidence-based approach to securing financial stability and reducing structural deficits.

It balances investment with discipline, supports those who need it and lays out a clear path towards a more resilient future.

I commend this budget to those we represent and to this Honourable Court.