Rachel Reeves is poised to deliver her Budget this week, with intense speculation surrounding potential tax increases designed to stabilise the nation’s finances.

The chancellor is anticipated to outline measures addressing a significant public funds deficit and establishing a more robust financial reserve, aiming to reduce future demands on taxpayers.

These proposals are expected to be announced at approximately 12:30pm on Wednesday, 26 November.

Income tax

Chancellor Rachel Reeves has reportedly abandoned plans for a significant income tax hike, a move that would have broken manifesto pledges.

This U-turn follows less pessimistic forecasts received by the Treasury from the budget watchdog, leading to the measure being dropped from what Speaker Sir Lindsay Hoyle described as the “hokey cokey budget”.

Instead, Ms Reeves is now said to be favouring an extension of the existing freeze on income tax thresholds.

Should this be implemented alongside a freeze on National Insurance thresholds, it could generate an estimated £8.3 billion annually for the Exchequer by 2029/30.

By not increasing the thresholds, she will benefit from a process called “fiscal drag”, where as wages go up people are dragged into paying tax for the first time or shifted into a higher rate.

Cash ISAs

Sources familiar with Budget preparations have told the Financial Timesthat Reeves will cut the annual cash ISA limit from £20,000 to £12,000 in order to push more households to invest their savings into the UK stock market.

Read More: Rachel Reeves announces the Budget on Wednesday. Here’s what to expect