Chancellor set to unveil Budget as series of tax rises expected

Chancellor Rachel Reeves is due to unveil her highly anticipated second Budget in the Commons on Wednesday, following weeks of speculation over how she will fill the £20 billion gap in public finances.

While the chancellor U-turned on plans for a manifesto-breaking hike in income tax, a series of other tax rises are expected to be announced to help balance the books.

Ahead of her Budget speech, Reeves said she will take the "fair and necessary choices to deliver" on Labour's promise for change.

“I will not return Britain back to austerity, nor will I lose control of public spending with reckless borrowing," she said.

“I will take action to help families with the cost of living, cut hospital waiting lists, cut the national debt.

“And I will push ahead with the biggest drive for growth in a generation."

So far, the government has confirmed a number of measures, including raising the national minimum and living wage in a bid to ease cost-of-living pressures.

Its also been confirmed that prescription prices will be frozen next year, while rail fares will be frozen for the first time in 30 years.

Alongside this, the government has announced an expansion of sugar tax to include pre-packaged milkshakes.

Mayors in England will be given the power to levy a tourist tax, while £300 million will be invested in NHS technology to speed up administrative tasks and help cut waiting lists.

While the chancellor ditched plans to increase income tax, it's expected that the she will extend the freeze on tax thresholds, which would drag people into higher tax brackets as wage growth and inflation push up their salary.

If the government does extend the freeze for another two years until 2030, that would raise £7.5 billion a year.

It's also been heavily speculated that the government will scrap the controversial two-child benefit cap, after both Reeves and Prime Minister Keir Starmer suggested it could be lifted.

Meanwhile, the Treasury could likely introduce a 'mansion tax' on high-value homes.

This could involve revaluing some of the most valuable properties across council tax bands F, G and H and hit 100,000 of them with a new surcharge, with the threshold starting at £2 million.

'Salary sacrifice' schemes could also be targeted, with the chancellor reportedly considering limits on how much employees can pay into their pensions under the scheme before it becomes subject to national insurance.

Other announcements could include a new levy on electric cars, introducing 20% VAT on taxi journeys, tightening rules around the gifting of assets and wealth in inheritance tax, and lowering the annual cash ISA limit from £20,000 to £12,000.

Reeves could also reduce the amount people pay for energy by cutting the 5% VAT on domestic energy bills.

On Monday, Reeves called for unity among her party as she spoke in front of restive backbenchers.

Labour backbenchers are said to have become increasingly frustrated about the planned tax hikes, which come as the party’s opinion poll ratings have dropped significantly.

It also comes as Reeves faces the prospect of a downgrade in the Budget watchdog’s economic growth forecast for every year of this Parliament.

On Tuesday, shadow housing secretary James Cleverly said he expects to see a range of "stealth taxes", "which is exactly the opposite of what we need."

"Last year, Rachel Reeves said she was going to go for one big tax grab and then all the problems would go away.

"And we now know that's not going to be the case.

"So unfortunately, I think she's going to hit savers, she's going to hit business people, she's going to hit people's pensions.

"I think we're gonna see a whole range of stealth taxes which is the opposite of what we need."

Watch the Chancellor's Budget from 12.15pm on Wednesday live on ITV1, ITVX and our YouTube channel.

From Westminster to Washington DC - our political experts are across all the latest key talking points. Listen to the latest episode below...