When is the Budget and what might be in it?

The Chancellor Rachel Reeves will set out her plans for the economy when she delivers the Budget on 26 November.

There have been warnings that she will have to put up taxes or cut spending if she wants to stick to her own rules on government borrowing.

Before the 2024 general election, Labour promised not to increase income tax, National Insurance or VAT for working people.

In her Budget statement, the chancellor of the exchequer will outline the government’s plans for raising or lowering taxes.

It will also include big decisions about spending on health, schools, police and other public services.

The statement is made to MPs in the House of Commons.

Alongside the Budget, additional details about the measures and costs will be published by the Treasury, the government’s economic and finance ministry.

The independent Office for Budget Responsibility (OBR), which monitors government spending, will also publish an assessment of the health of the UK economy and a forecast of what it thinks will happen in the future.

The Budget speech usually starts at about 12:30 UK time – after Prime Minister’s Questions – and lasts for about an hour.

It will be broadcast live on the BBC iPlayer and on the BBC News website.

The Leader of the Opposition, Conservative MP Kemi Badenoch, will respond to the speech in the House of Commons.

MPs will then debate the measures for four days, before voting on them.

If approved by MPs, tax changes can come into effect immediately. However, the government must pass a finance bill to make them permanent.

There has been lots of speculation that Reeves might raise taxes in the Budget.

This is because she is expected to need to raise extra money to meet her self-imposed rules for government finances, called fiscal rules.

Reeves has two main rules, which she has said are “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

However, in its last report in March, the OBR said the chancellor only had £10bn headroom to meet these rules, which it called a “very small margin”.

Since then the government has U-turned on planned benefit cuts that had aimed to save billions, while the cost of government borrowing has also increased.

Tax thresholds

There has been speculation that if the government wants to raise more tax without increasing income tax, VAT or National Insurance for working people, it could extend the current freeze on income tax thresholds, which is due to end in 2028.

Freezing the thresholds means that, over time as salaries rise, 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 BBC Breakfast in September, Reeves did not rule out extending the freeze.

Property taxes

There have also been reports that property taxes could be reformed.

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.

One report suggested the government was considering taxing the money people make when they sell their main home in certain circumstances – this would mean changing the capital gains tax rules.

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, to help boost economic growth.

It is possible that reform could still happen, but other measures to encourage people towards personal investment are considered more likely.

Pension changes

There is often speculation about possible changes to pension rules ahead of the Budget, such as the tax relief available to savers and the level of the tax-free lump sum which can be withdrawn.

However, previous chancellors who have been tempted to change to the higher rate tax relief on pension contributions have not done so. Cutting the relief would save the Treasury money, but may make pension savings less attractive.

Other taxes

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 National Insurance (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, as their tax would increase but they don’t pay that rate of NI so wouldn’t benefit from the matched cut.

The Sunday Times has reported that the government is considering scrapping Value Added Tax (VAT) on domestic fuel bills. The move would see the current 5% VAT rate on bills being cut to zero.

In an interview with the BBC in September, the prime minister was asked whether he could rule out a VAT rise – in response, he said Labour’s election manifesto from last year “stands”, a response that was echoed by the chancellor.

The TUC, the umbrella group for trade unions in the UK, has called for higher taxes on online gaming companies and on banks’ profits.

Youth employment guarantee

The chancellor announced in September that young people who have been out of work for 18 months will be given paid placements to help them secure full-time employment.

People who decline the offer could face sanctions, including having their benefits cut.

However, it is not yet known what jobs will be on offer or whether young people will have choice in what placement they accept. Full details are due to be announced in the Budget.

The Labour 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.

The latest official figures show that growth in the UK economy has slowed in recent months. 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 seen in the three months to June, and from the 0.6% growth seen between March and May.

In August, UK government borrowing – the difference between public spending and tax income – hit £18bn, the highest level seen for the month in five years.

The Office for National Statistics (ONS) said an increase in tax and National Insurance receipts was offset by higher spending on public services, benefits and debt interest.

Meanwhile prices in the shops are still rising faster than wanted.

Inflation – the rate at which prices rise – 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 cut because of concerns that the jobs market was weakening, with data showing job vacancies were continuing to fall and wage growth was slowing.

Lower interest rates can make loans, credit cards and some mortgages cheaper, but can also mean worse returns for savers.

The Bank held rates in September, arguing the UK was “not out of the woods” on inflation.