Chancellor George Osborne will reportedly use the first Conservative Budget in almost 20 years to unveil a new tax cut for middle income earners by raising the level at which workers pay a 40p tax rate.
The plans were first hinted at by Prime Minister David Cameron at last year’s Conservative party conference, at which Cameron said that too many people had been dragged into paying higher levels of tax.
At the time Cameron pledged to raise the threshold at which people pay the 40p rate from £41,900 to £50,000 in the next parliament.
The Times reports Osborne will today announce an acceleration of that plan, bringing it ahead of Cameron’s planned 2020 deadline and moving beyond the goals stated in March of a 40p tax rate at £42,700 in April 2016 and £43,300 from April 2017.
The Government has already committed to increasing the amount workers can earn tax-free, promising in its manifesto to raise the personal allowance to £12,500.
It has been announced Osborne will reduce pension tax relief for those earning over £150,000 in order to fund a higher inheritance tax threshold of £1m for couples.
The Chancellor will also reportedly slow the pace of welfare savings in this parliament, extending his £12bn target for savings to three years, instead of two.
According to the Financial Times, Osborne will announce cuts equivalent to £8bn for his initial deadline of 2017/18, with a further £4bn in savings set to come in the following year.
Osborne is still expected to unveil a range of new cuts, including restricting tax credits for families with more than two children for new claimants, with an estimated saving of £1.4bn.
The Chancellor will lower the benefit cap from £26,000 to £23,000 for claimants in London, with a lower limit expected elsewhere, and require local authority and housing association tenants earning upwards of £30,000, or £40,000 in London, to pay up to market rates on rent.