Budget 2025 live: Rachel Reeves faces day of reckoning as she unveils billions in tax rises

The Independent’s political editor David Maddox reports:

The chancellor will try to claim that the now infamous election manifesto promise of not raising income tax, VAT or national insurance contributions has not been broken but she will be wrong.

By freezing thresholds on income tax again an extra 1.3 million people will be paying the higher rate of 40p tax than otherwise would have done.

In fact, the chancellor last year rejected extending the threshold freeze which was put in place in 2021 because it would mean breaking the manifesto promise on raising income tax.

She has avoided putting extra on actual rates but more people will be paying income tax at all its levels just through a stealth tax.

The Independent’s Albert Toth reports:

Chancellor Rachel Reeves will deliver the Autumn Budget at approximately 12:30pm on Wednesday after Prime Minister’s Questions.

HM Treasury will then release the budget documents, which provide the technical details of the economic forecasts and proposed tax changes.

The leader of the opposition, Kemi Badenoch, will then respond, followed by the leader of the third largest party, Sir Ed Davey.

The Office for Budget Responsibility (OBR), the budget watchdog, will also publish revised forecasts for the economy and public finances.

Minimum wage rates are to be increased next year, the government has announced ahead of the Budget.

From next April the national living wage will rise by 4.1 per cent to £12.71 an hour for eligible workers aged 21 and over, which the government said will increase gross annual earnings of a full-time worker on the rate by £900, benefiting around 2.4 million low-paid workers.

The national minimum wage rate for 18 to 20-year-olds will increase by 8.5 per cent to £10.85 an hour, while for 16 to 17 year olds it will increase to £8 per hour.

However, amid a struggling job market for young people, the Resolution Foundation has warned that “these steep increases risk causing more harm than good if they put firms off hiring”.

The freeze on income tax thresholds is set to be extended when Rachel Reeves delivers her Budget on Wednesday, according to reports.

The chancellor has dropped plans to hike the headline rate of income tax, which would have breached Labour’s pledge around not putting up national insurance, VAT or income tax.

A freeze would see more people dragged into paying tax for the first time or shifted into a higher rate as wages increase.

According to The Times, the thresholds are set to be frozen for a further two years, as Ms Reeves looks to a ‘smorgasbord’ of tax rises to fill the gaps in the public finances.

Rachel Reeves will deliver her long-awaited Budget today, with a raft of tax rises expected as she looks to plug the gaps in the public finances.

Speculation has swirled for months as to what the chancellor will announce in the financial statement.

The chancellor had laid the groundwork for a manifesto-busting increase to income tax, but that idea has seemingly been abandoned.

Speaking ahead of the Budget, Ms Reeves said that people are “angry at unfairness” in the UK economy,

In a filmed address, she said: ““I have to be honest that the damage done from austerity, a chaotic Brexit and the pandemic were worse than we thought.

“But I’m not going to duck those challenges, and nor will I accept that our past must define our future. It doesn’t have to.”