A raft of tax rises is expected in the budget this lunchtime – with the chancellor acknowledging that voters are “angry at the unfairness in our economy”.

In a newly released video, Rachel Reeves said the public is “frustrated at the pace of change” – but vowed to “take the fair and necessary choices” to tackle the cost of living crisis.

And in a dig at the Conservatives – especially former prime minister Liz Truss – she pledged not to impose austerity, lose control of public spending, or engage in more reckless borrowing.

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Tax rises: What we know so far

Taxation will be a dominant part of the budget as Ms Reeves tries to plug an estimated £30bn black hole in the public finances.

A headline measure is expected to be an extension of the freeze on income tax thresholds for another two years beyond 2028, which should raise about £8bn.

But given the chancellor had ruled out such a measure last year – because it would “hurt working people” and “take more money out of their payslips” – this will attract criticism from opposition parties.

The chancellor has backed away from raising income tax rates outright, a move that would have breached Labour’s manifesto, but she still needs to find the cash to pay for her public spending plans.

Some measures already confirmed by the government include:

• Allowing local authorities to impose a levy on tourists staying in their areas

• Expanding the sugar tax levy to packaged milkshakes and lattes

• Imposing extra taxes on higher-value properties

It is being reported that the chancellor will also put a cap on the tax-free allowance for salary sacrifice schemes, raise taxes on gambling firms, and bring in a pay-per-mile scheme for electric vehicles.

Setting the scene ahead of the budget at 12.30pm, Ms Reeves said she will “push ahead with the biggest drive for growth in a generation”, promising investment in infrastructure, housing, security, defence, education, and skills.

Although she has vowed not to “duck challenges” nor “accept that our past must define our future”, she admitted that “the damage done from austerity, a chaotic Brexit, and the pandemic were worse than we thought”.

The fiscal black hole is down to several factors – including a downgrade in the productivity growth forecast, U-turns on cuts to benefits and the winter fuel allowance, as well as “heightened global uncertainty”.

Nonetheless, the chancellor has promised more investment to cut NHS waiting lists, deal with “waste in the public sector”, and reduce the national debt.

“This budget is for you, the British people. So that together we can build a fairer, stronger, and more secure Britain,” she said.

Conservative shadow chancellor Sir Mel Stride has said Ms Reeves is “trying to pull the wool over your eyes” – having promised last year that she would not need to raise taxes again.

Meanwhile, Liberal Democrat deputy leader Daisy Cooper has accused her and the prime minister of “yet more betrayals”.

What could her key spending announcements be?

As well as filling the black hole in the public finances, these measures could allow the chancellor to spend money on a key demand of Labour MPs – partially or fully lifting the two-child benefits cap, which they say will have an immediate impact on reducing child poverty.

Benefits more broadly will be uprated in line with inflation, at a cost of £6bn, The Times reports.

In an attempt to help households with the cost of the living, the paper also reports that the chancellor will seek to cut energy bills by removing some green levies, which could see funding for some energy efficiency measures reduced.

Other measures The Times says she will announce include retaining the 5p cut in fuel duty, and extending the Electric Car Grant by an extra year, which gives consumers a £3,750 discount at purchase.

The government has already confirmed several key announcements, including:

• An above-inflation £550 a year increase in the state pension for 13 million eligible pensioners

• A freeze in prescription prices and rail fares

• £5m to refresh libraries in secondary schools

Extra funding for the NHS will also be announced in a bid to slash waiting lists, including the expansion of the “Neighbourhood Health Service” across the country to bring together GP, nursing, dentistry and pharmacy services – as well as £300m of investment into upgrading technology in the health service.

And although the cost of this is borne by businesses, the chancellor will confirm a 4.1% rise to the national living wage – taking it to £12.71 an hour for eligible workers aged 21 and over.

For a full-time worker over the age of 21, that means a pay increase of £900 a year.

Read more from Sky News:
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Britons facing ‘cost of living permacrisis’

However, the Tories have hit out at the chancellor for the impending tax rises, with shadow chancellor Sir Mel Stride saying in a statement: “Having already raised taxes by £40bn, Reeves said she had wiped the slate clean, she wouldn’t be coming back for more, and it was now on her. A year later and she is set to break that promise.”

He described her choices as “political weakness” – choosing “higher welfare and higher taxes”, and “hardworking families are being handed the bill”.

The Liberal Democrat deputy leader Daisy Cooper is also not impressed, and warned last night: “The economy is at a standstill. Despite years of promises from the Conservatives and now Labour to kickstart growth and clamp down on crushing household bills, the British people are facing a cost-of-living permacrisis and yet more betrayals from those in charge.”

She called on the government to negotiate a new customs union with the EU, which she argues would “grow our economy and bring in tens of billions for the Exchequer”.

Green Party leader Zack Polanski has demanded “bold policies and bold choices that make a real difference to ordinary people”.

The SNP is calling on the chancellor to “help families” rather than “hammer them with billions of pounds of cuts and damaging tax hikes that destroy jobs and hurt economic growth”.

A headline tax-raising measure expected in today’s budget is an extension of the freeze on income tax thresholds for another two years beyond 2028, which should raise about £8bn.

The amount people pay is dependent on how much they earn, with different tax bands kicking in at different income levels.

Read more: Chancellor to announce tax rises in budget

In the past, these thresholds have been increased in line with inflation. But more recently they have been frozen, leaving people paying more to the exchequer even if actual tax rates stay the same.

The Conservative government began the thresholds freeze in 2021. At last year’s budget, Rachel Reeves said the Labour government would extend the freeze though not beyond 2028, as to do so would “hurt working people”.

Sky News looks at what the thresholds are, the implications of freezing them, and how that causes “fiscal drag”.

Income tax thresholds

England, Northern Ireland and Wales all have the same income tax rates, set by the British government.

Scotland’s income tax bands are set by the Scottish government, so Westminster budget announcements on income tax do not affect workers in Scotland.

For England, Northern Ireland and Wales, there is a “personal allowance” of £12,570, under which no income tax is paid.

For those earning above £100,000, the personal allowance goes down by £1 for every £2 of income, and can go down to zero, so a person can end up paying income tax on all of their income.

What does freezing thresholds do?

Thresholds were previously increased annually by consumer price index (CPI) inflation – the estimate of the level of prices of goods and services bought by households.

But, because income tax thresholds have been frozen while wages continue to rise, more people are being brought into higher bands and having to pay more income tax.

A worker whose earnings just keep up with inflation is paying a larger proportion of their salary in tax due to the freeze.

This means more money for the government – a lot more.

The Office for Budget Responsibility (OBR) estimates a continuing freeze in thresholds would raise about £42.9bn annually by the 2027/28 tax year.

And the Institute for Fiscal Studies (IFS) has projected that freezes to the basic and higher rates of income tax alone would raise £39bn a year by 2029-30.

That is roughly similar to the amount of revenue that would be raised by increasing all income tax rates by 3.5 percentage points.

Fiscal drag

Freezing income tax thresholds without tax rates increasing has been branded a “stealth tax”, as the government collects more revenue without having to pass a law to raise tax rates.

It is also known as fiscal drag, as more people are pulled into paying tax, or into paying tax at a higher rate.

The OBR estimates the freeze will bring nearly four million more people into paying income tax, three million more people into the higher rate (40%) and 400,000 more into the additional rate (45%) by 2028-29.

Bereaved families of black, minorities and migrant women who died after suffering violence and abuse have called on the prime minister to help end femicide.

At a Downing Street vigil on International Day for the Elimination of Violence Against Women, the group said urgent reforms to policing and sentencing are needed “to address systemic failures”.

Yasmin Javed, whose daughter Fawziyah Javed was killed after being pushed by her husband from Arthur’s Seat in Edinburgh, said authorities had ignored Fawziyah’s reports of abuse.

“It fell on deaf ears,” she told Sky News, explaining that Fawziyah, 31, who was pregnant when she died, had made complaints about her husband but had been murdered days before she was set to leave him.

“We’ve had our hearts ripped into millions of pieces. It’s not getting any easier, it’s getting more and more difficult.”

Kashif Anwar was convicted of Fawziyah’s murder and was jailed for at least 20 years in 2023.

Tuesday’s vigil highlighted key legislative amendments the families, led by campaign group Southall Black Sisters, are championing.

The amendments include Banaz’s Law, named after 20-year-old Banaz Mahmod, who was subjected to an horrific assault, strangled and stuffed in a suitcase by family members on the orders of her father.

The amendment seeks to explicitly recognise “honour-based” abuse as an aggravating factor in sentencing for relevant offences.

The families also want courts to impose sentences equivalent to murder for self-harm and suicides driven by domestic and “honour”-based abuse, and say the government must ensure all women have equal access to safety and support, regardless of immigration status.

Banaz Mahmod’s sister Bekhal, who testified against her relatives to help secure their conviction, said nearly two decades after the murder, efforts to protect women had not progressed.

Speaking from an undisclosed location in the witness protection scheme, she said the murder “happened in 2006, and we’re almost in 2026 – that’s 20 years later. Not much has changed and it’s very, very disappointing.

“What happened to Banaz has happened, but what we could do is prevent it from happening to other people. I don’t understand why much more hasn’t been done to better the situation for others.”