Rachel Reeves will reportedly freeze thresholds for an extra two years after abandoning her plans to hike income tax in the budget.
She could also bring in a new levy on high-value properties, in the measures to be announced on November 26.
The Chancellor had been expected to raise income tax in the face of a yawning gap in her spending plans, hinting as recently as Monday that the alternative would be “deep cuts” to public investment.
But she has ditched the plan, which would have broken a Labour manifesto promise.
Ms Reeves is understood to have U-turned after improved forecasting from the Office for Budget Responsibility, but other tax rises have not been ruled out.
Limits to salary sacrifice schemes and new measures to tax electric vehicles are still in the mix, as the Treasury pursues a “smorgasbord” approach of raising a range of smaller taxes.
There are reports the Chancellor will extend the freeze on income tax thresholds for two years until 2030, in a move that could raise some £8 billion a year for the Treasury.
She could also introduce a new levy on some of the most valuable homes, which would mainly affect properties in London and the South East, according to The Telegraph.
The move would reportedly see 2.4 million of the most valuable properties across council tax bands F, G and H revalued and a new, separate, surcharge applied to 300,000 of them on top of existing council tax bills.
A Treasury spokesperson said: “We do not comment on speculation around changes to tax outside of fiscal events.”
Despite the U-turn on income tax, the Chancellor still intends to give herself larger fiscal headroom – the buffer against economic headwinds which could affect Government spending plans.
Ms Reeves has been laying the ground for tax rises over recent weeks, including during an early-morning speech on November 4 aimed at preparing people for the budget.
Downing Street said on Friday that the thrust of the speech still stands.
The Prime Minister’s official spokesman said: “She was very clear about the challenges the country faces and her priorities in addressing those challenges.
“All of that still stands.”
The spokesman refused to comment on budget speculation, but said the Chancellor will aim to “build more resilient public finances with the headroom to withstand global turbulence”.
Government borrowing costs rose on Friday as speculation about the change of direction sparked a sell-off in gilts, but the market later stabilised somewhat as the reasoning behind the Treasury’s decision-making became apparent.
Helen Miller, director of the Institute for Fiscal Studies (IFS) think tank, said it was “not unusual” for chancellors to make last-minute changes to their Budget plans.
She added: “But the news that Rachel Reeves has backed away from a plan to increase the rates of income tax will lead investors to worry that the Chancellor will instead increase a range of smaller taxes that can be more damaging to economic growth.
“They may also worry that the change of plans signals that this Government are reluctant to do politically difficult things.
“These are the kinds of concerns that can lead investors to demand higher returns when lending to the Government.”
If the Government does choose to raise a set of smaller taxes, they should also be reformed “so that they do less damage to growth”, the IFS chief said.
