GEORGE Osborne’s announcement today will be one of the most important to come out of parliament this year.

The Spending Review will set out how £4 trillion worth of taxpayers' money will be spent over the next five years, up until the next election in 2020.

Paul Aplin is tax partner at A C Mole & Sons based in Blackbrook Park Avenue, Taunton, and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty.

Speaking before the Spending Review announcement, Mr Aplin said: “The main thing is that so many government departments are protected in terms of expenditure plans that there are very few places the Chancellor can go to save money, meaning those remaining departments are going to get hit harder.

“That means local government will get hit harder.”

Mr Aplin also said that tax raising measures were “inevitable” if Mr Osborne is to achieve his commitment of balancing the books in five years.

He highlighted four possible areas for these tax increases to come in, the first being capital gains tax.

“Back in 2010, Capital Gains Tax was the first thing he went after, and I think Capital Gains Tax could be on his radar.”

While VAT, income tax and employee’s national insurance will not be affected, Mr Aplin has highlighted self-employed national insurance as another possible target for the Chancellor.

Third on the list of areas that could be affected by tax increasing measures according to Mr Aplin is fuel duty.

Currently, just under 58p per litre goes the government, along with 20% VAT.

It has been frozen for four years now after the Chancellor promised to keep fuel duty on hold until 2015.

The recent drop in fuel costs combined with diesel emissions crisis could mean that George Osborne increases the tax on fuel.

The recent drop in fuel costs, thanks to falling oil prices, could also make fuel duty a tax-increase target.

The fourth area that could be affected in the Spending Review is pensions.

“We know there are going to be big changes. He is looking at introducing some really radical pension changes,” Mr Aplin added.

George Osborne’s stated preference is cuts over increasing taxes, but he will have to introduce some measures if he wants to balance the books in five years, as is his plan.

The Chancellor is expected to focus on housing, with a pledge to "turn generation rent into generation buy" and plans for 400,000 new homes in England.

But some of the deepest cuts to public spending in recent memory were also anticipated.

He is expected to say: "In the end, spending reviews like this come down to choices about what your priorities are. And I am clear: in this Spending Review, we choose housing. Above all, we choose homes that people can buy.

"For there is a crisis of home ownership in our country.

"We made a start in the last parliament, and with schemes like Help to Buy the number of first-time buyers rose by 60%.

"But frankly we need to do much more. Today we set out our bold plan to back families who aspire to buy their own home."

Mr Osborne was due to say how he intends to slice £20 billion from spending and £12 billion from welfare, as well as raising £5 billion in a crackdown on tax avoidance.

The Chancellor would say the settlement is about picking priorities and insist tackling the "crisis" in home ownership is crucial.

The NHS in England was promised an additional £3.8 billion for frontline services in 2016/17, while ministers have pledged to bring in a fairer funding formula for schools and the Government will continue to meet the United Nations target of spending 0.7% of GDP on international aid.

Police chiefs have warned about their ability to respond to a Paris-style attack if they are hit by further deep cuts to frontline policing, but the Home Office, alongside ministries such as Local Government, Justice, Energy and Culture, is expected to face budget reductions of 20%-30%.

A commitment to meet the Nato target to spend 2% of GDP on defence will allow a £12 billion rise in funding for military equipment, bringing the total to £178 billion over the next decade.

Higher-than-expected borrowing in October has led to predictions the Chancellor may miss his £69.5 billion deficit target for this year and be forced to downgrade the £10 billion surplus forecast for 2020.

This excess borrowing will be added to the national debt, which Mr Aplin said is around £1.6trillion.

He added: “The scale of the figures is still horrifying.”