It seems every time there is a Budget nowadays it’s a crunch one, more significant than those that have come before. There’s been pretty stiff competition during this decade alone.

Rishi Sunak’s post-pandemic behemoth in the spring of 2021, when he dropped a £32.1billion tax bomb to help rebuild the economy following the Covid meltdown, was certainly a biggy. Rachel Reeves, last year, delivered the biggest tax-raiser on record with an eye-watering £41billion in hikes.

That was even more than Norman Lamont’s notorious 1993 fiscal raid in the wake of Black Wednesday – which is estimated to have brought in an extra £40.8billion.

It was also larger than Denis Healey’s 1975 Budget, valued at £33.3billion, when he became the last Chancellor to raise income tax (more of that later).

Perhaps the most notorious fiscal event of the 2020s was the Liz Truss and Kwasi Kwarteng mini-Budget three years ago which plunged the economy into a tailspin and ultimately led to the-then Prime Minister being ousted after just 49 days in the job.

On Wednesday Ms Reeves will deliver her second Budget, the ramifications of which could be seismic, both politically and economically.

Not only is her job on the line, Sir Keir Starmer’s is too, as she prepares to undo Labour’s main election manifesto promise not to raise personal taxes.

Added to this toxic mix is the fact that unemployment is rising and businesses are struggling.

So too is the UK economy, partly due to global headwinds including Donald Trump’s tariffs and partly because of the financial straightjacket Ms Reeves has forced upon herself and the nation.

It ultimately means that millions of people face being clobbered with punishing tax rises for the second year in a row, despite promising this would never happen.

Her first Budget, last October, was supposed to be a “one and done” fiscal event that definitively sorted out Britain’s public finances after the “chaos” she claimed to have inherited from the Conservatives.

“I’m really clear, I’m not coming back with more borrowing or more taxes,” the Chancellor told furious bosses as she tried to repair the damage afterwards.

Businesses were particularly angered by her decision to increase employer national insurance contributions at a time when costs were rising because of a sharp increase in the minimum wage alongside a toughening of employment regulations.

But things have got worse, leaving the Chancellor and Prime Minister to spend 2025 fanning and then dousing speculation about certain levies, such as higher income tax, as they desperately scrambled to fill a £20 billion to £30 billion black hole in Treasury coffers.

Ministers were working up a plan to hike the basic rate – perhaps by 2p – and then simultaneously cut national insurance contributions for those on the basic rate of income tax.

But fearing a backlash from MPs and the public, that idea has been ditched.

This hokey cokey has undoubtedly shattered public, market and business confidence.

If this Budget lands badly then it could be toast for either one, or both, of them.

Leadership rivals like Wes Streeting, Angela Rayner and Andy Burnham all scent blood.

“Things could unravel very quickly indeed, it will be like a feeding frenzy in a pool of piranhas,” said one Labour insider.

Others think the Budget will be another staging post on the journey towards Keir Starmer’s exit in 2026.

Nigel Farage has labelled next May’s local, Welsh and Scottish elections as a British version of the US mid-terms.

Where the country really tests the temperature of the nation.

His Reform UK party, currently riding high in the polls, are expected to do very well.

Labour and the Conservatives not so.

“This Budget is going to have a far reaching impact, not only on the lives of the public and the economy, but on the political landscape,” a senior Labour politician said.

“It could result in a new Prime Minister and, because they come as a package, a new Chancellor and economic vision.”

Ms Reeves has come out fighting in recent days, insisting that her economic plans are right and that she is “sick of people mansplaining how to be chancellor” to her.

She has also admitted the government has “made a couple of unforced errors” but insisted it is “fighting to win”.

Which begs the question, what could actually be announced when Ms Reeves stands at the dispatch box at around 12.30pm on Wednesday afternoon?

Income tax thresholds frozen

It is now widely expected the Chancellor will freeze income tax thresholds for another two years beyond 2028.

This could raise about £8billion but critics argue this is a “stealth tax” as it drags millions of people into either paying for the first time or forking out more.

Pensioners could be hit particularly hard in the long run.

According to the latest rumours, it seems all of these options will be dropped in favour of dragging out the interminable threshold freeze that’s been in place since 2021 until, presumably, the end of Parliament in 2030.

Pensions

Aside from the aforementioned impact of extending the freeze on tax thresholds, there are likely to be pension reforms too.

Ms Reeves is expected to cap tax-free sacrifices at £2,000 a year meaning staff putting away any more than that would have to pay the standard NI rate: 8% if they earn less than £50,000 and 2% above that.

Companies currently don’t have to pay the 15% employer national insurance tax on cash that goes into workers’ pensions.

Inheritance tax

According to some reports the Treasury is considering a lifetime cap on the value of gifts someone can pass on before they die.

Currently, there is no charge on gifts if the donor survives seven years but a cap – possibly about £100,000 – on how much people can give before they are taxed could be introduced.

Ms Reeves is also said to be toying with extending the seven-year period before inheritance tax has to be paid to 10 years or even longer.

The taper relief rate – the tax discount for living at least three years after giving a gift – is understood to also be under review.

VAT

Ms Reeves previously sparked rumours she is looking at raising VAT by refusing to rule it out.

She could end lower or zero rates for products such as food and children’s clothes.

The Chancellor could also lower the starting threshold for businesses paying VAT – but tax experts say this risks increasing inflation.

What about the two-child benefit cap?

Both the PM and Ms Reeves have strongly hinted the two-child benefit cap will be scrapped – despite suspending rebel backbenchers calling for the policy, introduced by the Tories, to be axed last year.

It means while parents can claim child tax credit or Universal Credit payments for a first and second child, they can’t for any subsequent children.

These are separate payments to Child Benefit, which has no limit on the number of children that can be claimed for.

It would cost billions of pounds to lift the cap and raising income tax was being mooted as a way to help pay for it – so it remains to be seen if the other tax-raising options available are sufficient. 

Stamp duty and council tax

One of the first budget rumours came in August when it was reported the Treasury was considering a new tax on the sale of homes worth more than £500,000 to replace stamp duty.

Under the proposal, sellers, instead of buyers, would be responsible for paying the tax.

Officials are also said to be looking at whether, on top of a national property tax on the purchase of homes, a local property tax could replace council tax.

ISAs

Speculation has mounted that the Chancellor will cut the annual tax-free cash ISA limit from £20,000, possibly by half, in an attempt to get people to invest in stocks and shares ISAs instead.

She is also looking at a “British ISA” scheme, where investors get an additional £5,000 tax-free allowance to put into UK-listed shares.

Fuel duty/EVs

There has been a freeze on fuel duty since 2011, while a 5p-per-litre cut from 2022 is to remain in place until March 2026.

But Ms Reeves could increase fuel duty by up to 3p per litre.

Electric vehicle drivers face being hit with a pay-per-mile tax on top of other road taxes from 2028, meaning an extra £250 a year, on average.

Gambling tax

The Institute for Public Policy Research (IPPR) think tank has said increasing gambling taxes would earn the Treasury about £3.2billion extra a year.

Gordon Brown has backed calls for a new tax on profits made by online casinos, slot machines and other high-stakes betting firms.

However, the horse racing industry looks like it will be spared from the measures.

Mansion tax

The Chancellor is understood to be looking at an annual 1% charge on the amount a property’s value exceeds £2million – a £10,000-a-year levy for homes worth £3million.

Another proposal would see capital gains tax (CGT) charged when someone sells their main home, based on the amount it has increased in value during ownership.

This is likely to only be applied to the most expensive properties, with a possible threshold of £1.5million, which would affect about 120,000 homeowners and higher-rate taxpayers getting CGT bills of nearly £200,000.

Energy bills

The Treasury said last month that action to bring down energy prices is among the options being considered at the Budget.

Ms Reeves is understood to be considering cutting the 5% VAT rate on bills to zero, a move that would save bill payers about £80 a year and cost £2.5bn to implement.