Rachel Reeves is unlikely to impose more direct taxes on businesses because of concern over weakening confidence, according to Treasury sources.
Instead she will focus her tax plans on assets held by the wealthy in order that “those with the broadest shoulders” pay more.
She is said to have ruled out an individual wealth tax but is considering national insurance payments on income from rental properties and changes to capital gains tax on more expensive homes.
Ms Reeves may offer help for struggling householders by axing the 5% VAT charge on domestic gas and electricity, which would save consumers about £86 a year. There is also pressure for her to scrap some of the levies, such as climate change contributions, which are added to consumers’ bills.
According to tax specialists, Ms Reeves will need to find about £22 billion in tax rises in her 26 November budget after a series of u-turns on spending cuts, combined with higher borrowing costs and downbeat economic forecasts.
Speaking in Washington where she is attending a meeting of the International Monetary Fund, she was asked about what taxes she was considering. She said: “Judge me by my record last year”, pointing to her imposition of VAT on school fees, scrapping non-dom tax status and increasing taxes on private jets.
She gave hints at some concessions on national insurance contributions which are one of the main concerns of businesses. Last year’s hike is blamed for curbing investment and recruitment and has fed into the slow growth data.
“It’s not all about tax, but I do want to have a competitive environment for all businesses in Britain,” she said. “We have to get the balance right.”
She said she was doubling the number of visas to highly talented, high paid individuals to “come here and build teams in the UK”.
Gross domestic product for August came in at 0.1% following a downwardly revised 0.1% in July.
Julian Jessop, Economics Fellow at the free market think tank the Institute of Economic Affairs, said: “The three-month comparison did improve slightly, from 0.2% to 0.3%, but is likely to drop back again in September.
“The big picture is that the UK economy has stalled again as pre-Budget jitters have frozen activity in the private sector.
“This is confirmed by multiple surveys across the full range of businesses – including services, retail, manufacturing, construction, and the housing and labour markets.
“The Chancellor must use her November statement to restore some confidence among businesses, consumers and investors. If taxes are raised, this should at least be done in ways that reduce uncertainty once and for all.
“This could be achieved by broader-based increases in the main taxes, which would raise more money in ways that are less likely to distort the economy, combined with an increase in the fiscal headroom to protect against future shocks.
“But it would clearly be much better to focus on controlling public spending and freeing the private sector to drive growth instead.”
The IMF expects the UK to have the second-fastest growth among advanced economies next year.
The rates of growth remain modest at 1.3% for this year and next, but those forecasts would see the UK outperform all the other G7 economies apart from the US in 2025, slipping back to third fastest in 2026.
However, it also says the UK will have the highest annual average inflation in the G7 economies in 2025 and 2026, at 3.4% and 2.5% respectively because of high energy and utility bills.
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