Everything you need to know about the Budget
ReutersChancellor Rachel Reeves is expected to increase taxes in the Budget on 26 November.She has said she will make the "necessary choices" for the economy, to bring down NHS waiting lists, the national debt and the cost of living.The statement will be made in the House of Commons at about 12:30 GMT. The Leader of the Opposition, Conservative MP Kemi Badenoch, will give an immediate response. What tax rises could be in the Budget?According to government sources, Reeves has decided not to raise income tax rates, a move that had been widely expected.However, speculation remains that the chancellor could extend a freeze on income tax and NI thresholds beyond the planned 2028-29 deadline.Freezing thresholds means that, as salaries rise over time, more people reach an income level at which they start paying tax and NI. Some people have to start paying higher tax rates.The chancellor is planning to raise about £2bn by limiting a tax break on pension contributions, the Times has reported.It suggested Reeves could put a £2,000 cap on the amount workers can put into their pensions under "salary sacrifice" schemes without paying National Insurance. At the moment there is no limit.It would mean that any contributions above the cap would be subject to NI payments by both employees and employers.Other reports suggest the government could shake up property taxes.Reeves is planning to introduce a new tax on high-value homes in England, the Telegraph has said. About 2.4 million properties - across the council tax bands F, G and H - would be affected, it reported.Council tax funds local authorities. The UK government sets rules for England, while the governments in Scotland and Wales have responsibility for council tax in those nations. Northern Ireland uses a separate domestic rates system. There have also been suggestions that more landlords should pay NI. At present, if being a landlord is not your main source of income, you may not pay any. The Resolution Foundation think tank suggested that all landlords should pay NI at a basic rate of 20% with an additional rate of 8% for property earnings above £50,270 a year.The chancellor is considering a new tax on electric vehicles (EVs). This could help make up for the fall in fuel duty as more drivers move away from petrol and diesel cars. According to the Telegraph, EV drivers could be charged 3p per mile, on top of other road taxes, amounting to an extra £12 on a journey from London to Edinburgh.A government spokesperson told the BBC: "Fuel duty covers petrol and diesel, but there's no equivalent for electric vehicles. We want a fairer system for all drivers."The government may limit the tax break that people can get when buying a bicycle through the Cycle to Work scheme, according to reports.A limit on how much people can spend on a bike through the salary sacrifice scheme could be introduced, the FT said.The scheme offers savings of 42% of the cost of a bike for higher rate taxpayers and 30% for basic rate taxpayers. A previous spending cap of £1,000 was lifted in 2019.Sturti/Getty ImagesThe chancellor is expected to introduce a new limit on how much can be spent on a bicycle through cycle to work schemesThe TUC, the umbrella group for UK trade unions, has called for higher taxes on banks and online gaming companies. In September, the chancellor told ITV News that "there is a case for gambling firms paying more".The FT has reported that the government may also close a tax loophole which UK firms argue gives an unfair advantage to foreign online retailers like Shein.At the moment, overseas retailers can send packages worth less than £135 to the UK without incurring import duties.What other measures could be in the Budget?Parents can only claim universal credit or tax credits for their first two children. The rule applies to third or subsequent children born after 6 April 2017.The chancellor hinted at changes when she told the BBC it was not right that children in bigger families were "penalised".She could scrap the limit entirely or extend the benefit to all families, irrespective of the number of children, but at a lower level.Mike Harrington/Getty ImagesReeves has suggested that benefit limits on larger families might be lifted The BBC understands the government could bring down gas and electricity bills by cutting the current 5% rate of VAT charged on energy, or reducing some regulatory costs which suppliers can pass on to customers.Why is the chancellor expected to put up taxes?The chancellor needs more money in order to meet self-imposed rules for government finances which she says are "non-negotiable". The two main rules are:Not to borrow to fund day-to-day public spending by the end of this parliamentTo get government debt falling as a share of national income by the end of this parliamentThe Office for Budget Responsibility (OBR) - the government's official forecaster - has assessed the gap in public finances to be close to £20bn, the BBC understands.How is the UK economy doing?The government has repeatedly said 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.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 2025 and 2026.
