Govt eyes early increase to personal allowance

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Chancellor George Osborne is considering a package of measures to lessen the impact of his controversial cuts to tax credits.

A plan, including speeding up the planned increases in the personal allowances, could be unveiled in the Autumn Statement, the Mail on Sunday reports.

Under current proposals, the Government will raise the starting rate of income tax to £11,000 in April 2016, and to £12,500 over five years.

According to the Mail, the Chancellor is also looking at excluding some claimants from the changes or slowing down the rate at which cuts are made.

Osborne’s plan aims to save £4.6bn but according to Institute of Fiscal Studies families hit by the cuts will lose nearly £1,300 a year on average.

Conservative peers and MPs have publicly warned the proposals need to be rethought.

The plan has already been voted on twice by MPs in the Commons and the House of Lords will vote on the issue today.

On Thursday MPs will debate the “distributional effect” of the changes and the Work and Pensions committee is also holding an inquiry.

The Chancellor will deliver the Autumn Statement on 25 November.