Everything to expect ahead of Autumn Budget set to be announced tomorrow

Chancellor faces pressure as first Budget approaches

With households continuing to feel the squeeze from rising living costs, the Government is under pressure to offer financial relief while deciding how to raise revenue.

Possible measures include extra help with energy bills, changes to the way online retailers pay VAT and higher taxes on banks.

Property owners, motorists and savers will also be watching closely for announcements that could affect their finances.

Questions remain over plans for an annual charge on expensive homes, possible changes to inheritance tax and the future of fuel duty.

Healey has yet to confirm the full package of measures, leaving uncertainty over which proposals will make it into the final Budget.

Here are the main areas to watch when the Chancellor delivers his Autumn Budget tomorrow.

Minimum wage increase

As with nearly every year, the minimum wage will be going up, however, by how much is the real question.

According to The Times, Chancellor John Healey is expected to announce in Wednesday’s Budget that the National Living Wage will rise by 3.9% in 2027. 

This would take the hourly rate for workers aged 21 and over from £12.71 to around £13.20.

The National Minimum Wage for those aged 18 to 20 is also expected to increase, rising from £10.85 to approximately £11.27 an hour. If approved, the new rates would begin in 2027.

Energy bills and household support

Households could receive further help with energy costs, which are expected to rise again.

One proposal under discussion is an extra £100 for people receiving the Warm Home Discount. The scheme currently gives around six million eligible households £150 off their bills.

The Government has also scrapped VAT on household electricity bills, saving a typical household around £45 a year.

Energy Secretary Miatta Fahnbulleh has acknowledged the pressure on consumers, while Healey has said he wants the Budget to provide relief for families and businesses.

Income tax, VAT and National Insurance

The Government has indicated it does not intend to increase the main rates of income tax, VAT or National Insurance.

However, Healey has yet to confirm the final tax measures, leaving uncertainty over what other changes could be announced.

Banks could face higher taxes

The UK's four largest lenders made around £15 billion in combined profits during the first half of the year, putting possible tax increases on the sector under scrutiny.

The Chancellor could raise the additional corporation tax surcharge paid by banks, currently set at 3% on top of the standard 25% rate.

The surcharge was previously reduced from 8%. Another option would be to increase the bank levy, which applies to certain banking liabilities.

The Institute for Public Policy Research has also proposed a temporary tax on banks' excess profits, estimating it could raise £1 billion. Trade unions and other policy groups have called for the sector to contribute more.

Motorists and fuel duty

Drivers could benefit from a fuel duty freeze as oil prices fluctuate amid the conflict involving Iran.

Plans announced by former Chancellor Rachel Reeves included fuel duty increases of 3p per litre in January and a further 2p in March.

The Road Haulage Association has also called for a 15p-per-litre rebate for essential fuel users, including lorry, coach and van drivers.

Online marketplaces and VAT

Amazon, eBay and other online marketplaces could be required to collect VAT from overseas retailers as part of a crackdown on unpaid tax.

The proposal could raise an estimated £1 billion, with the money potentially used to reduce business rates for high street shops.

Reports suggest the rules would apply to retailers with annual turnover above £90,000, regardless of where they operate.

Tax on expensive homes

The Government could revisit plans for an annual charge on high-value properties. Under the existing proposal, homes worth more than £2 million would face a yearly bill of between £2,500 and £7,500 from April 2028.

The Office for Budget Responsibility estimates the charge could raise around £400 million a year.

Lowering the threshold to £1.5 million would bring another 200,000 homes into scope, although reports suggest this expansion may have been dropped.

Capital gains and inheritance tax

Healey has reportedly ruled out increasing capital gains tax, which applies to profits from selling assets such as shares and property.

Concerns include the possibility that higher rates could encourage wealthy people to leave the UK or delay selling their assets.

Inheritance tax reform has also been discussed by Prime Minister Andy Burnham, including the possibility of replacing the current system with a broader charge on estates.

However, Burnham has said his plans for major adult social care changes will be put to voters at a general election, making a significant reform announcement in this Budget less likely.

Property tax reform

Burnham has criticised the UK's property tax system and expressed support for a land value tax, which would be based on the land itself rather than the buildings on it.

However, he said in July that there were no immediate plans to abolish council tax or stamp duty.

Defence spending

The UK has committed to raising defence spending to 3.5% of GDP by 2035. Healey previously supported a separate target of reaching 3% by 2030 while serving as Defence Secretary.

Reports suggest the earlier target could be dropped as the Government sets out its financial plans. The two targets have different deadlines and should not be confused.