A major tax increase could be introduced in the Budget. Several expertshave been warning there could be key changes to tax policy in the fiscal statement. Iona Martin, tax partner at accountancy firm Bishop Fleming, warned there could even be an increase in income tax.

Labour previously pledged it would not raise income tax or National Insurance, although it did increase employers National Insurance, in last year's Autumn Statement.

Ms Martin said: "Once thought politically unthinkable, and even ruled out by the Chancellor herself, the rate of income tax could be increased by 1p or 2p to generate a large amount of tax revenue. It would be the first such rise in the main rate since 1975 when Denis Healey was Chancellor.

"Whether this could be combined with a similar cut to employee National Insurance (as suggested by the Resolution Foundation), remains to be seen. But if the money is needed and spending cannot be cut then an income tax rise seems increasingly likely."

The Resolution Foundation proposed there should be a 2p cut in employee National Insurance offset by a 2p rise in income tax, to help raise revenues.

Ms Martin said: "There is an argument that an increase in the rate of income tax is potentially better than complicating the tax system even more with tax changes in other and more obscure areas. Such a desire for less complexity is often lost with many Chancellors in the past who did not want to increase headline rates of tax."

Another area where Labour could look to raise revenus is by changing the inheritance tax rules. In last year's Autumn Statement, the Government set out plans to make private pensions liable for inheritance tax, from April 2027.

Ms Martin warned there could be further changes this year, such as bringing in a lifetime gifting limit, extending the freeze on the £325,000 nil-rate allowance until 2030, or limiting or reducing the £175,000 residence nil-rate allowance.

Sarah Beale, CEO of the AAT (Association of Accounting Technicians), said the upcoming Budget will be a "real test" for the Chancellor in trying to balance election promises with the need to plug a growing gap in the UK's finances. She said: "There's already plenty of speculation about what might be on the table: possible changes to gambling taxes, capital gains rates, and inheritance tax exemptions, alongside talk of staggering stamp duty payments to help get the market moving again.

"And while we've heard assurances before, the recent statement that personal tax rises 'can't be ruled out' has only added to the uncertainty." Ms Beale urged the Government to think about small businesses and the growing costs they face.

She said: "They're already weighed down by red tape, rising costs, and a tax system that's becoming more complex by the day. Especially, at a time when we need them to be able to step up and help drive growth. These are the very businesses we need to power growth, yet they're being stifled instead of supported."

When asked previously about plans to raise taxes in the Budget, a Treasury spokesperson said: "We do not comment on speculation around future changes to tax policy." Chancellor Rachel Reeves will present the Budget before Parliament on Wednesday, November 26.