Jennifer Clarke & Tom EspinerBBC NewsReutersThe Chancellor Rachel Reeves will set out 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.What is the Budget?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.What time is the Budget and what happens afterwards?The Budget speech usually starts at about 12:30 UK time – after Prime Minister’s Questions – and lasts 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 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. What might be in the Budget?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 parliamentTo get government debt falling as a share of national income by the end of this parliamentHowever, in its last estimate 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 thresholdsThere 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”.Property taxesThere have also been reports that property taxes will 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 reformIn 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 changesThere 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 taxesThe TUC, the umbrella group for trade unions in the UK, has called for higher taxes on online gaming companies and on banks’ profits.How is the UK economy doing?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 most recent figures show the UK’s economy grew by 0.3% between April and June. This was down from the 0.7% growth seen between January and March, but was still better than expected.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 July, which is above the Bank of England’s 2% target.Despite this, in August the Bank cut its key interest rate to 4%, taking the cost of borrowing to the lowest level for more than two years.The Bank moves interest rates to try to keep inflation on target, and cuts are less likely when price rises are above 2%.However, the Bank cut rates because of concerns that the jobs market is weakening, with data showing job vacancies are continuing to fall and wage growth is slowing.Lower interest rates can make loans, credit cards and some mortgages cheaper, but can also mean worse returns for savers.
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When is the Budget and what might be in it?
