Rachel Reeves has dropped plans to increase income tax rates at the Budget on 26 November, according to reports in the Financial Times.
The newspaper says the chancellor and prime minister U-turned on increasing the tax, which would have broken an election manifesto promise, over fears it would anger voters and Labour MPs.
Speaking to BBC Breakfast, Culture Secretary Lisa Nandy said "no decisions were made or set in stone" until Reeves delivered the Budget in the House of Commons.
In response to the reports, UK government bonds and the pound have come under pressure.
The yield on the benchmark 10-year government bond has risen 0.11% or 11 basis points - a very big move in a short time. Sterling was also lower, falling 0.3% to 1.313 US dollars.
