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2012 Budget: Tax allowances set to rise further 2012 Budget: Tax allowances set to rise further
(40 minutes later)
Chancellor George Osborne could announce a significant further increase in personal tax allowances in the Budget, the BBC understands.Chancellor George Osborne could announce a significant further increase in personal tax allowances in the Budget, the BBC understands.
The threshold below which no-one pays income tax is to rise to £8,105 next month, but Whitehall sources suggested plans to lift it further were expected.The threshold below which no-one pays income tax is to rise to £8,105 next month, but Whitehall sources suggested plans to lift it further were expected.
The Lib Dems have urged more help for low and average earners in tough times.The Lib Dems have urged more help for low and average earners in tough times.
In his third Budget, Mr Osborne will also give an update on the state of the UK economy and the public finances.In his third Budget, Mr Osborne will also give an update on the state of the UK economy and the public finances.
The coalition government has pledged to take all those earning up to £10,000 out of income tax altogether by 2015.The coalition government has pledged to take all those earning up to £10,000 out of income tax altogether by 2015.
They lifted the tax threshold by £1,000 to £7,475 in April 2011, meaning the first £7,475 of people's income is not liable for tax. The measure benefited all taxpayers, irrespective of their income.They lifted the tax threshold by £1,000 to £7,475 in April 2011, meaning the first £7,475 of people's income is not liable for tax. The measure benefited all taxpayers, irrespective of their income.
A further £630 increase to £8,105 is due next month but the Lib Dems in particular have been pushing for "further and faster" action on what is regarded as a flagship policy for the party.A further £630 increase to £8,105 is due next month but the Lib Dems in particular have been pushing for "further and faster" action on what is regarded as a flagship policy for the party.
'Radical''Radical'
Speaking in Parliament earlier, Deputy Prime Minister Nick Clegg said he wanted the Budget to relieve the tax burden on those on low and average incomes, many of whom were "feeling the pinch and struggling to make ends meet".Speaking in Parliament earlier, Deputy Prime Minister Nick Clegg said he wanted the Budget to relieve the tax burden on those on low and average incomes, many of whom were "feeling the pinch and struggling to make ends meet".
The commitment to meet the £10,000 target was "the most radical tax policy in British politics for many years", he said.The commitment to meet the £10,000 target was "the most radical tax policy in British politics for many years", he said.
Mr Osborne, who will unveil his Budget at 1230 GMT, has also said he wants to do more to help "working people".Mr Osborne, who will unveil his Budget at 1230 GMT, has also said he wants to do more to help "working people".
The BBC's political correspondent Vicki Young said the measure would also appeal to many Conservatives who believed it was a simple way of getting more money into people's pockets.The BBC's political correspondent Vicki Young said the measure would also appeal to many Conservatives who believed it was a simple way of getting more money into people's pockets.
It is not clear how any further increase will be paid for, or whether the measure will apply to all taxpayers or only those paying the basic 20% rate. It is unclear how any further increase will be paid for, when it will come into force, and whether it will apply to all taxpayers or only those paying the basic 20% rate.
Economists have said raising the threshold to £10,000 would cost billions, although it could be partly paid for by reducing higher rate tax allowances. Economists have said raising the threshold to £10,000 would cost billions, although it could be partly paid for by reducing higher rate tax allowances. Those not paying tax at all will not benefit.
Those not paying tax at all will not benefit.