Lib Dems pledge further tax-free allowance rise

An iPad with the word "tax" on it The independent Institute for Fiscal Studies estimates the cost of the proposed change at £3.5bn.

Related Stories

A rise in the tax-free personal allowance to £12,500 during the next Parliament is being proposed by the Liberal Democrats.

Their general election manifesto will also pledge to consider, after the allowance rise, increasing the National Insurance threshold to the same level.

The £2,000 allowance rise by 2020 would be worth £400 a year to basic rate taxpayers, the party said.

Labour said the Lib Dems should "come clean" about how they would fund it.

The UK Personal Allowance - the amount you can earn in the UK before having to pay any tax - has risen during the current Parliament from £6,500 to its current level of £10,000. From next April, it is due to rise to £10,500.

Chief Secretary to the Treasury Danny Alexander Mr Alexander says the Lib Dems have already delivered "the biggest tax cuts for a generation"

"By cutting tax in this Parliament, cutting tax further in the next Parliament, and then moving on to National Insurance, we can make sure that over the course of a decade we shift the balance in the tax system - a generational shift - to help people in work," said Lib Dem Chief Secretary to the Treasury Danny Alexander.

Some 26 million working people would enjoy a cut in tax from the Lib Dems' proposed allowance rise, he said.

Mr Alexander added: "We want to make sure we have a tax system that rewards people who work, that rewards people particularly working on low and middle incomes.

"It puts the tax cuts where they are needed most."

'Broke promise'

Independent public spending researcher body the Institute for Fiscal Studies estimates such a change would cost £3.5bn.

It calculates the Lib Dem proposal would increase the personal allowance by £890 more than under normal inflationary rises, which would in fact be worth £178 a year for a basic rate taxpayer by 2020.

BBC political correspondent Arif Ansari said the change, if enacted, would effectively mean that anyone on the minimum wage would not pay income tax.

"But the party also has another challenge - how to make sure they win political credit from those who have benefited," he said.

Cathy Jamieson, Labour's shadow treasury minister, said: "Nobody will believe a word the Lib Dems say on tax.

"They backed the Tories in giving a huge tax cut to millionaires while breaking their promise not to raise VAT on everybody else."

More on This Story

Related Stories

More UK Politics stories

RSS

Features

  • photo of patient zero, two year-old Emile OuamounoPatient zero

    Tracking first Ebola victim and and how virus spread


  • A young Chinese girl looks at an image of BarbieBarbie's battle

    Can the doll make it in China at the second attempt?


  • Prosperi in the 1994 MdSLost in the desert

    How I drank bat blood and urine to survive in the Sahara


  • Afghan interpetersBlacklisted

    The Afghan interpreters left by the US to the mercy of the Taliban


Elsewhere on the BBC

  • UnderwaterHidden depths

    How do you explore the bottom of the ocean? BBC Future finds out

Programmes

  • The challenge is to drop a bottle of water within 100 metres of this dummyClick Watch

    The race to get water – transported by drone – to a man stuck in remote Australia

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.