When is the Budget and what could Rachel Reeves announce?

Chancellor Rachel Reeves is expected to increase taxes in the budget later.

Before giving her budget statement, Reeves said she would pursue “fair and necessary choices” for the economy to reduce NHS waiting lists, the national debt and the cost of living.

The Chancellor said she would lead “the biggest campaign for growth in a generation”, which would include broad investment across a range of sectors to build a “fairer, stronger and more secure Britain”.

The statement will be made in the House of Commons at approximately 12:30 GMT. The opposition leader, Conservative MP Kemi Badenoch, was quick to respond.

Reeves announced on Tuesday ahead of the Budget that the minimum wage for people over 21 will rise by 50p an hour to £12.71 in April 2026.

For workers aged 18 to 20, the minimum wage will rise by 85p to £10.85. The government eventually wants to eliminate differential rates for this age group, creating a single minimum wage for all adults.

For 16 and 17-year-olds and apprentices, the minimum wage will rise from £7.55 to £8 an hour.

After the minimum wage increased last year, businesses warned that another increase could result in hiring freezes or job cuts.

The so-called milkshake tax has been announced ahead of the budget.

The existing sugar tax, which mainly applies to fizzy drinks, will be applied to bottles and cans of milk-based drinks, including milkshakes, flavored milks, milk alternative drinks and lattes.

This may add a few pence to these beverages. Or, as has happened with some fizzy drinks, manufacturers may reduce their sugar content to avoid the tax.

According to government sources, Reeves has decided not to raise income tax rates, a move that was widely expected.

However, speculation remains that the Chancellor could extend the freeze on income tax and NI thresholds beyond the planned 2028-29 deadline.

Freezing the threshold means that, as wages rise over time, more people reach the income level at which they start paying tax and NI. Some people will have to start paying higher tax rates.

The Times has reported that the Chancellor plans to raise around £2 billion by limiting tax breaks on pension contributions.

It suggested Reeves could impose a £2,000 cap on the amount workers can put into their pensions under “salary sacrifice” schemes without paying National Insurance. There is no limit at present.

This will mean that any contributions above the limit will be subject to NI payments by both employees and employers.

For people receiving the full rate of the new state pension, the Chancellor is expected to confirm a rise of more than £550 a year from April.

This is due to the “triple lock”, meaning the state pension increases by 2.5% plus inflation, or average earnings growth – whichever is the highest figure.

The Times and Telegraph have both reported that Reeves is planning to impose a new tax on high-priced homes in England. He said around 2.4 million properties in council tax bands F, G and H would be reassessed.

The Times said the tax would apply to properties worth more than £2m, affecting around 100,000 households with an average surcharge of £4,500.

There have also been suggestions that more landlords should pay NI. Currently, if being a landlord is not your main source of income, you cannot make any payments.

The Resolution Foundation think tank suggested that all landlords should pay NI at the basic rate of 20% with an additional rate of 8% for property income over £50,270 per year.

The Chancellor is considering a new tax on electric vehicles (EVs). This could help offset the decline 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, an extra £12, on top of other road taxes when traveling from London to Edinburgh.

A government spokesperson told the BBC, “Fuel charges include petrol and diesel, but there is no flat charge for electric vehicles. We want a fair system for all drivers.”

The budget is also expected to include an extra £1.3 billion of funding for the Electric Car Grant Scheme, which offers subsidies of up to £3,750 for eligible models.

According to reports, the government may limit the tax exemption people can get on purchasing bicycles through the Cycle to Work Scheme.

The FT said a limit on how much people can spend on bikes could be introduced through a salary sacrifice scheme.

The scheme offers a saving of 42% of the cost of the bike for higher rate taxpayers and 30% for basic rate taxpayers. The previous spending limit of £1,000 was removed in 2019.

The Chancellor is reportedly planning to cut the amount of money that can be saved tax-free in cash individual savings accounts (ISAs).

Reports have suggested that Reeves may reduce the annual allowance from £20,000 to £12,000.

However, MPs on the Treasury select committee have said that cutting Cash Isa limits is unlikely to have the desired effect of boosting investment in stocks and shares.

The government is expected to close a tax loophole that UK companies argue gives foreign online retailers like Shein an unfair advantage.

At the moment, overseas retailers can send packages worth less than £135 to the UK without paying import duty, but this will end.

The TUC, the leading group of 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 overpayment by gambling companies”.

Parents can only claim Universal Credit or tax credits for their first two children. This rule applies to the third or subsequent children born after April 6, 2017.

The Chancellor hinted at change when he told the BBC it was not right that children in large families be “punished”.

It could eliminate the cap altogether or extend the benefit to all families regardless of the number of children, but at a lower level.

The BBC understands that the government could reduce gas and electricity bills by cutting the current 5% rate of VAT on energy, or by reducing some of the regulatory costs that suppliers can pass on to customers.

The Chancellor needs more money to meet self-imposed rules for government finances, which he says are not “negotiable”. There are two main rules:

• No borrowing for everyday public spending until the end of this Parliament
• To reduce government debt as a share of national income by the end of this Parliament

The BBC believes that the government’s official forecaster – the Office for Budget Responsibility (OBR) – has estimated the gap in public finances to be close to £20 billion.

The government has repeatedly said that boosting the economy is the key priority.

A growing economy generally means that people spend more, additional jobs are created, more taxes are paid and workers get better pay raises.

In October, the International Monetary Fund (IMF) projected that the UK would become the second fastest growing major economy in 2025. However, it is also predicted that the UK will face the highest rates of inflation among the G7 countries in 2025 and 2026.