As John Healey prepares his first budget as chancellor, tax is the small word that is likely to cast a large shadow over next week’s big fiscal announcement.

In its election manifesto, Labour promised not to increase the “big three”: income tax, national insurance and VAT.

As a result, much of the pre-budget speculation has centred on which other levies Healey might seek to change.

No one seems to like paying tax, but some taxes – or the rules around them – are more unpopular than others. Here, we look at some that have been under the spotlight recently, and the facts and figures behind them. Inheritance tax: is it a levy on middle-class families?

In a recent sales pitch to voters, the Conservative leader Kemi Badenoch pledged to “abolish inheritance tax [IHT] as soon as we can afford it”.

She said IHT was “supposed to be a tax on the super-wealthy” but had become a “tax on ordinary middle-class families in every corner of our country”.

It is true that the sums collected through the tax have reached record levels. A total of £8.5bn was paid in the 2025-26 tax year – up from £8.2bn the year before.

The government’s forecaster, the Office for Budget Responsibility (OBR), predicts £9.5bn will be raised through IHT this year and £14.5bn by 2030-31.

At present, about 5% of estates pay IHT – roughly 30,000 a year. However, rising house prices and frozen allowances, plus recent rule changes that will pull some people’s pensions into the net, mean IHT has become of growing concern among some families who do not consider themselves to be wealthy.

The standard IHT rate is 40%, and could be payable on assets above the £325,000 tax-free allowance everyone is entitled to. However, beyond this headline rate are allowances that remove or reduce the bill for most families.

This tax-free threshold is increased to £500,000 by an additional £175,000 residence allowance if you leave your main home to a direct descendant (for estates worth less than £2m).

You can leave everything to your spouse without paying tax, and they also inherit any unused allowances. This means a couple can leave up to £1m to children or grandchildren without attracting the tax.

Government figures show that these allowances bring down the effective rate people pay. So across all of the estates paying IHT in 2023-24, the average effective tax rate was 13%.

On estates worth between £1m and £1.5m, where there was IHT to pay, the average bill was £151,000, or 12% of the total value.

A rule change introduced by Rachel Reeves when she was chancellor means, that from April 2027, any money left unspent in a defined contribution (AKA money purchase) pension after your death, will be included in the calculation for the first time.

The government estimates that, of about 213,000 estates with inheritable pension wealth in 2027-28, 10,500 will have to pay IHT where previously they would not.

Meanwhile, 38,500 estates will be landed with a bigger bill. The average IHT bill is expected to increase by about £34,000 when pension assets are included. Capital gains tax: will I face a higher bill?

Changes to the rules have turned capital gains tax (CGT) into a big money-spinner for the government, with the amount raised surging nearly 80% in a year to reach £24.3bn in 2025-26.

It is a tax on the profit you make when you sell – or, to put it in HM Revenue and Customs language, “dispose of” – something that has increased in value such as a second home, or investments that are not held within an Isa. That sum of £24.3bn compared with £13.7bn the previous year.

You get an annual tax-free allowance, but it is much less generous than it was, thanks to two cuts by Jeremy Hunt, when he was the Conservative chancellor. Until 2022-23 it was £12,300, but it was reduced to £6,000, and then to £3,000.

Partly owing to this, the number of people who paid CGT in 2024-25 was up 45% on the previous year, hitting an “all-time high” of 584,000. (This compares with more than 34 million income taxpayers.) However, according to HMRC, most CGT is paid by a small number of taxpayers.

In 2024-25, nearly half of the tax raised came from those who made gains of £5m or more. This group represents less than 1% of CGT taxpayers each year, it says.

Official data shows that CGT is most likely to be paid by those aged between 55 and 64. Alongside 45- to 54-year-olds, these two age groups represented 44% of those paying CGT and 56% of the tax paid in 2024-25.

The rate of CGT you pay when you have used up your allowance was increased by Reeves in her autumn 2024 budget to 18% for basic-rate taxpayers and 24% for higher or additional rate taxpayers.

Senior Labour figures have lobbied Healey to raise rates to the same level as those on income tax (20%, 40% and 45% for basic, higher and additional rate respectively). They argue earned income should not be taxed more heavily than gains from assets.

This week, it was being reported that Healey has rejected calls to raise CGT in the budget, though nothing is certain.

Those supporting higher rates can point to a country such as Denmark, where CGT on investment gains is up to 42%. Who will have to pay the mansion tax?

From April 2028, owners of properties in England valued at £2m or more, will have to pay the high-value council tax surcharge – commonly known as the “mansion tax” – on top of existing council tax.

There are four price bands, with the annual charge ratcheting up from £2,500 for properties valued between £2m and £2.5m to £7,500 for those worth £5m and above.

The government says “fewer than 1%” of residential properties in England will be affected by the surcharge, which the OBR estimates will raise £400m a year.

The estate agent Hamptons estimates there are just over 138,000 homes in England (mainly in London and the south-east) worth more than £2m.

In the government consultation about the new surcharge, it was suggested help would be at hand for people who live in valuable homes but do not have a big income. Under its proposals, this could mean people with a household income of £35,000 or less, and savings of £16,000 or less, would be able to defer the annual charge.

While Badenoch has pledged to scrap this tax, too, it was reported that Healey considered – but then rejected – a plan to extend it to properties worth £1.5m. This would have doubled the number of homes within the tax’s scope. Is council tax about to become fairer?

This is one of the biggest outgoings for many households, and hundreds of thousands of Londoners have been told to brace for large bill increases next year.

Hammersmith and Fulham has warned residents their bills could rise by 150% to maintain services, while neighbouring Wandsworth and Westminster are considering a near-doubling of bills.

For Hammersmith and Fulham residents, a 150% rise would increase the annual council tax bill of a household living in a typical band D property to £2,522.50, up from £1,009.

These councils are among six in England permitted to raise bills by an unlimited amount over the next two years. Five are in London (the others are Kensington and Chelsea and City of London), and the other is Windsor and Maidenhead in Berkshire.

These councils have big holes in their budgets because the money they receive from central government has been dramatically reduced under the Fair Funding formula. This gives higher weighting (and thus a greater relative share of overall resources) to local authorities with high “deprivation” scores.

While proposed bill increases will be a blow to struggling households, Stuart Hoddinott, an associate director at the Institute for Government thinktank, says councils involved have received higher grant funding relative to need for a long time and used it to subsidise low council tax rates.

This year, a band D household bill in Wandsworth is £1,028, while in next door Lambeth the equivalent rate is £2,047. Meanwhile, residents of Kensington and Chelsea are paying £1,667 for band D homes, while in Blackpool they are stumping up £2,513.

“From an individual perspective, these bills will be a shock,” says Hoddinott, who, as a Hammersmith resident, is personally affected. However, he adds that these local authorities currently have among the lowest rates in England.

“Bills in Westminster and Wandsworth are about 43% of the average rate in the country, which means that even if they double, they would still be in the bottom half of councils for council tax. They’re exceptionally low.”Will I have to pay tax on my state pension?

Several million more pensioners have started paying income tax since the personal allowance was frozen at £12,570 five years ago. In 2022-23, it was 7.1 million and this year the number is 9.6 million.

Typically, pensioners whose only income is the state pension do not pay tax because it adds up to less than the tax-free allowance. Those who do pay tax are usually those receiving money from a private or workplace pension.

However, when the full new state pension is increased next April, thanks to the “triple lock” it will top £13,000 a year – creating a headache for the government.

In total, about 13.3 million people claim the state pension, and the pensions minister, Torsten Bell, has said those who only just exceed the personal allowance will not need to pay tax. Bell has promised that the chancellor will spell out how this will work in practice in the budget.

It was all but confirmed this week that pensioners would get a 3.9% state pension rise next year. That will mean the annual full new state pension rising to £13,036.

Steve Webb, a former pensions minister who is now a partner at the consultancy LCP, suggests that the government will work out the tax bills for those whose sole income is the new state pension.

Based on the 3.9% increase next April, which would result in a £90 tax bill, Webb suggests they might not issue demands for anything under £100.