If you’ve felt like the run-up to Rachel Reeves’ Budget has been one long guessing game, you’re not alone.
Economists have practically run out of polite ways to say “this is a mess,” with a few even calling the whole thing a straight-up shambles.
And honestly, after months of rumours, leaks, scraps of plans, and more U-turns than a dodgy satnav, it’s hard to blame them.
When the Chancellor finally steps up at 12.30pm to unveil her big package, she’ll bring to an end a marathon round of speculation that many businesses say has frozen them in place.
According to analysts, the stop-start, who-knows-what’s-coming atmosphere has choked off growth because everyone’s been too nervous to spend or invest.
Even Sir Lindsay Hoyle couldn’t resist poking fun at the Budget circus, joking about the “hokey cokey” of Reeves’ plans—one minute income tax rises were in, then suddenly they were out, replaced with something else entirely.
The Income Tax Back-and-Forth That Started It All
Earlier this month, Reeves had been laying the groundwork for what would have been a major, manifesto-breaking rise in income tax rates.
Then—after days of suspense—it emerged she’d dropped the whole idea.
Instead, she’s expected to cut National Insurance by 2p and ditch the planned 2p rise in income tax.
But removing one big tax rise means she’s now scrambling to plug a multi-billion-pound gap.
And that appears to mean a long list of smaller, more targeted hikes on everything from posh houses to milkshakes.
A New “Mansion Tax” on High-Value Homes
One of the headline-grabbing ideas is a new levy on homes worth over £2 million.
The average hit? Roughly £4,500.
The tax would be collected via council tax bills, targeting more than 100,000 expensive properties and raising about £450 million.
To avoid forcing people to sell their homes just to pay the bill, homeowners would reportedly be allowed to defer the payment until they move or die.
Property experts are warning that dropping this bombshell into the housing market—while the government is trying to build 1.5 million homes—couldn’t come at a worse time.
Freezing Income Tax Thresholds (Again)
One of the Chancellor’s quietest tools is also one of her most powerful: freezing tax thresholds.
She’s expected to extend the current freeze by two more years, taking it all the way to 2030.
This “stealth tax” means people pay more over time as rising wages push them into higher tax bands.
Keeping things frozen—along with National Insurance thresholds—could raise around £8 billion.
Targeting Salary-Sacrifice Pensions
Another huge pot Reeves has her eyes on is the salary-sacrifice pension system, used by millions.
Right now, workers give up a slice of their salary and their employer puts it straight into their pension.
This reduces the National Insurance paid by both employer and employee.
The system costs the Treasury £4 billion a year.
Reeves had been looking at capping the amount you can sacrifice at £2,000—which already would have saved £2 billion—but reports now suggest she may go further, slashing or even axing the scheme to find £3–4 billion instead.
Businesses say they can’t absorb the cost themselves.
Workers could see their retirement savings shrink by tens of thousands over a lifetime if the change goes ahead.
Charging EV Drivers by the Mile
Electric car owners may be about to face their own new cost: a 3p-per-mile road tax.
For the typical EV driver, that means around £276 extra per year.
For the Treasury, it’s around £375 million in revenue.
The idea is to make up for collapsing fuel duty as more people ditch petrol and diesel.
But experts warn this could spook the EV market just as it’s starting to grow.
To soften the blow, Reeves is planning a package that includes £1.3 billion to boost existing EV grants—up to £3,750 off a new electric car—plus £200 million to expand charging points.
Even so, campaigners are urging her not to touch traditional fuel duty, warning motorists are already feeling squeezed.
Scrapping the Two-Child Benefit Cap
One of the biggest political flashpoints is the likely scrapping of the two-child benefit cap.
The rule, introduced in 2017, stops parents from claiming support for a third child.
Removing it would cost around £3.5 billion a year, but Labour MPs and charities have been pushing heavily for it.
Conservatives argue it’s financially reckless when Reeves is already under pressure to hike taxes elsewhere to fill the hole in public finances.
Alongside this, working-age benefits—including Universal Credit, PIP, and child benefit—are expected to rise with inflation, costing roughly £6 billion.
Fuel Duty: Frozen… With a Catch
Motorists are also set to get another year of frozen fuel duty, plus the continuation of the 5p cut Rishi Sunak introduced.
The twist? Reeves will tell the OBR she still plans to put it up in 2027, which, on paper, means the freeze doesn’t “count” against her fiscal plans. The watchdog hates this trick—but can’t really do much about it.
Lowering the Cash ISA Limit
Reeves is expected to slash the cash ISA allowance from £20,000 to £12,000 a year.
The idea is to push more people into investing their savings in stocks and shares. But the Commons Treasury Committee says this won’t work—and could even damage the mortgage market, because building societies rely heavily on ISA savings for their funding.
Possible VAT on Taxis
The government still hasn’t ruled out adding 20% VAT to private-hire fares—which would raise £750 million but add £2–£3 to the cost of a typical £12 journey.
Campaigners say this would put vulnerable people, especially women travelling at night, at greater risk by making taxis less affordable.
The idea has been kicking around since a court case back under the previous government but remains deeply controversial.
A Sugar Levy That Finally Includes Milkshakes
Milkshakes look set to lose their long-standing exemption from the sugary drinks tax.
Producers currently pay at least 18p per litre if a drink contains 5g of sugar per 100ml. The new plan lowers that threshold to 4.5g and ends the dairy carve-out entirely.
The original exemption was designed to avoid discouraging children from drinking calcium-rich products, but Reeves appears ready to scrap it in the name of public health—and Treasury revenue.
Betting Firms in the Firing Line
Another target: gambling companies.
Reeves has hinted she may raise levies on betting firms, with Gordon Brown among those calling the industry “undertaxed.” His argument: the extra cash could help fund removal of the two-child benefit cap.
But gambling operators say pushing taxes higher will drive customers toward unsafe black-market sites.
Minimum Wage Going Up
One thing Reeves has confirmed is that the minimum wage for workers aged 21+ will rise to around £12.71 an hour—a 4.1% jump.
Younger workers aged 18–20 will see a bigger increase, roughly 8%, bringing their rate close to £10.80. Labour had promised equal minimum wages for all adults during the election, and this move nudges the system closer to that commitment.
So… What Happens Next?
Once Reeves delivers the Budget, the political battle begins. Expect fierce debates, frantic number-crunching, and plenty of arguments over whether her mix of freezes, hikes, and targeted cuts can really fill the gaping hole in the nation’s finances.
For now, after months of swirling rumours, everyone—from homeowners to drivers to parents—will finally get clarity on what’s about to hit their wallets.
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