The Liberal Democrats will push major tax reforms to capital gains, pensions and housing to pay for increases to the personal allowance as they flesh out their manifesto for the next general election.
A briefing document to LibDem MPs, which was also sent to journalists by mistake, also says the party would look to target those earning £50,000 or more, suggesting such individuals are “not middle income earners”.
It says: ”We are looking at how the richest 10 per cent of people, those earning over £50,000, could make a further contribution. The vast majority of people in the country would consider £50,000 a very large salary: these are not the middle income earners.”
Yesterday, Liberal Democrat leader NIck Clegg said he wants the personal allowance threshold increased so no one on the minimum wage pays income tax.
The briefing document fleshed out its proposals, suggesting the personal allowance would need to rise to £12,300 and take place gradually over the course of the next parliament.
It would be partly funded by increases to capital gains tax to align the rates with income tax. It currently stands at between 18 per cent and 28 per cent.
The Lib Dems also want to reintroduce indexation allowances in order to ensure that no one is taxed on the portion of a gain which has arisen due to inflation. The move would aim to stop people being penalised for owning assets over the long term.
In addition the party wants to cut the pensions tax relief lifetime allowance to £1m from £1.25m. It believes the vast majority of employees will be unaffected by the proposals and its briefing document says this still represents a generous regime.
The party also wants to introduce its long held policy of a mansion tax with a charge of 1 per cent on homes worth more than £2m. Party president Tim Farron has floated the idea of a higher charge on homes worth more than £4m.
The Lib Dems say a proposed “jewellery tax” on wealth and assets other than property has been rejected and was never party policy.
In a policy paper on Fairer Taxes to be voted on at Liberal Democrat conference today, the party will vote on whether to re-introduce the 50p top rate of tax on incomes over £150,000.
They will also vote on stricter curbs on non-doms and a further HM Revenue & Customs crackdown on corporate tax avoidance.