When is the Budget and what might be in it?

Chancellor Rachel Reeves has acknowledged she is “looking at tax and spending” ahead of her autumn Budget on 26 November. Before the 2024 general election, Labour promised not to increase income tax, National Insurance or VAT for working people. But Reeves has faced repeated questions about whether the party will have to break that pledge Her latest comments follow a reference to tough decisions “in the coming months” in her party conference speech in September.

The chancellor of the exchequer’s Budget statement outlines government plans for raising or cutting taxes. It also includes big decisions about spending on public services such as health, schools and police. The statement is made to MPs in the House of Commons. It usually starts at about 12:30 UK time - after Prime Minister’s Questions - and lasts for about an hour. The Leader of the Opposition, Conservative MP Kemi Badenoch, will give an immediate response. MPs will then debate the measures for four days, before voting on them.

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There is a lot of speculation that Reeves will have to raise taxes because she needs more money in order to meet her self-imposed rules for government finances. She has two main rules, which she describes as “non-negotiable”: Not to borrow to fund day-to-day public spending by the end of this parliament To get government debt falling as a share of national income by the end of this parliament When the chancellor acknowledged that both tax rises and spending cuts were under consideration in an interview with Sky News, she insisted that she would “always make sure the numbers add up” . Income Tax and National Insurance The government could extend the current freeze on income tax thresholds, which is due to end in 2028. Freezing the thresholds means that, as salaries rise over time, more people reach an income level at which they start paying tax or qualify for higher rates. This is often referred to as a “stealth tax”. Speaking to the BBC in September, Reeves did not rule out extending the freeze. The Resolution Foundation think tank - which has close links to some members of the government - says some personal taxes will have to rise. As part of a package of measures, it recommended cutting 2p from the employee NI rate, while adding the same amount to income tax. Such a move would potentially affect pensioners, landlords and the self-employed more than workers. This is because their tax would increase but they wouldn’t receive a matched cut to NI. Faisal Islam: Reeves pre-emptively justifies tax rises How could National Insurance and income tax change in the Budget? What questions do you have about the Budget? Value Added Tax (VAT) The Sunday Times reported that the government was considering scrapping VAT on domestic fuel bills - cutting the current 5% rate to zero. Health Secretary Wes Streeting ruled out introducing VAT on private healthcare . Property taxes Reports suggest the government may reform property taxes . This could include replacing stamp duty - a tax buyers pay on properties above a certain value in England and Northern Ireland - with a property tax. Landlords could have to pay more taxes, and council tax could be replaced. Some people selling their main residence may have to pay capital gains tax. Youth employment guarantee In September, Reeves said that young people who have been out of work for 18 months will be given paid placements to help them secure full-time employment . Isa reform In July, the chancellor ruled out any immediate reform to cash Isas (Individual Savings Accounts). There had been speculation that she wanted to reduce the annual allowance to push people into investing in shares instead. Other measures to encourage such investment are considered more likely. Pension changes There has also been speculation about possible changes to pension rules, such as the level of tax relief available to savers and the size of the cash lump sum which can be withdrawn. Cutting the higher rate tax relief on pension contributions would save the Treasury money, but may make pension savings less attractive. Business taxes The TUC, the umbrella group for trade unions in the UK, has called for higher taxes on online gaming companies and on banks’ profits .

The Labour government says that boosting the economy is a key priority. A growing economy usually means people spend more, extra jobs are created, more tax is paid and workers get better pay rises. Growth in the UK economy has slowed in recent months, official figures show. The economy was flat in July , after increasing by 0.4% in June. Looking at the longer-term trend, the economy grew by 0.2% in the three months to July, down from the 0.3% growth in the three months to June, and the 0.6% growth seen between March and May. Meanwhile, government borrowing - the difference between public spending and tax income - reached £18bn in August. That was the highest level seen for the month in five years , driven by higher spending on public services, benefits and debt interest. Prices are also rising faster than expected. Inflation was 3.8% in the year to August , the same as in July, which is above the Bank of England’s 2% target. In August, the Bank cut interest rates for the fifth time in a year, taking the cost of borrowing to the lowest level for more than two years. It made the cut because of concerns that the jobs market was weakening, with data showing job vacancies were continuing to fall and wage growth was slowing. However, the Bank held rates at its next meeting in September , arguing the UK was “not out of the woods” on inflation. In October, the International Monetary Fund (IMF) forecast that the UK was set to be the second-fastest-growing major economy in 2025 . However, it also predicted that the UK will face the highest rate of inflation among G7 nations in both 2025 and 2026, driven by rising energy and utility bills.

What’s causing the UK’s long-term borrowing costs to rise? Why is UK inflation still rising? How are interest rates set, and will they fall further?

If approved by MPs, any tax changes in the Budget can come into effect immediately. However, the government must pass a finance bill to make them permanent. Further details about Budget measures - and what they cost - are published by the Treasury, the government’s economic and finance ministry. The OBR also publishes its assessment of the health of the UK economy and a forecast of what it thinks will happen in the future.