Coalition to raise personal allowance

The government is set to cut income tax for low earners by raising the personal allowance to £10,500 before the next election, according to Citywire.

Deputy Prime Minister Nick Clegg called for the move over the weekend and it has been reported that chancellor George Osborne is willing to implement the cut which would cost the Treasury around £1 billion.

The personal allowance threshold is due to reach £10,000 in 2014/15.

Clegg though has called to make it £10,500 from 2015, a move which he told the BBC could be paid for by a tax on the ‘super wealthy’ through a ‘mansion tax’, but conceded the Conservatives would not agree to this method.

However, the Daily Telegraph reported the Conservatives would be willing to agree to raise the personal allowance as its leadership comes under pressure from backbenchers to cut taxes.