Thousands of households could see an increase in their taxes after the Chancellor announces the Autumn Budget. Rachel Reeves is reportedly considering raising income tax rates by 2% and extending the freeze on tax thresholds.

A rise of 2% would mean Brits paying basic rate tax pay 22p for every £1 they earn. High-rate taxpayers would pay 42p for every £1, and additional-rate taxpayers would pay 47p. Tax thresholds are currently frozen until 2028, but the Chancellor could push this back to 2030, meaning Brits could be pulled into higher tax groups through fiscal drag, caused by inflation. Currently, a couple both earning £30,000 would pay £47,073 in tax over a five-year period. However, under these new rules, according to research by The Sun and AJ Bell, the same couple would see their tax bill increase to £51,501, a rise of £4,428.

If a couple both earned £40,000, they would currently pay £72,946 in tax. Under new rules, they could pay £79,562, a rise of £6,616.

A couple earning £60,000 each would pay £157,767 under the current system. With a 2% increase, they will pay £170,278, a £12,511 increase.

Laura Suter, personal finance director at AJ Bell, said: “A freeze on tax bands already drags more people into higher tax brackets each year as wages rise, effectively a stealth tax on families. 

“If the Government were to combine that with an outright hike to income tax rates, it would be a double blow for households.”

This comes after Ms Reeves said during a speech on Tuesday that everyone “must do their bit”, while refusing to rule out increasing income tax, VAT, and National Insurance.

Other announcements people are speculating could be announced in the Budget include a cut to tax relief on pensions, slashing the tax-free cash lump sum, and abolishing salary sacrifice schemes.