Howard was born in Cliftonville, Kent, England, the son of Mabel Grey (Wallace) and Arthur John Howard. He was educated at Clifton College (to which he left in his will a substantial legacy for a drama scholarship) and at the Royal Academy of Dramatic Art (RADA), acting on the London stage for several years before World War II. His first paid work was in the play Revolt in a Reformatory (1934), before he left RADA in 1935 to take small roles.

Although stories of his courageous wartime service in the British Army's Royal Corps of Signals earned him much respect among fellow actors and fans alike, files held in the Public Record Office reveal that he had actually been discharged from the British Army in 1943 for mental instability and having a "psychopathic personality". The story, which surfaced in Terence Pettigrew's biography of the actor, published by Peter Owen in 2001, was initially denied by Howard's widow, actress Helen Cherry. Later, confronted with official records, she told the Daily Telegraph (24 June 2001) that his mother had claimed he was a holder of the Military Cross. She added that Howard had an honourable military record and "had nothing to be ashamed of".