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Liberal Democrats make income tax pledge


The income tax threshold would be increased to £12,500 during the next Parliament if Liberal Democrats were to come into power.

The ‘income tax threshold’ is the amount of money a person needs to earn within a tax-year before they have to start paying income tax.

At the moment, the income tax threshold stands at £10,000, and it will rise to £10,500 in the next tax year. This means that the Liberal Democrat proposals would give workers an extra £2,000 of tax free income, and this would be worth around £400 a year to the basic rate taxpayer.

Additionally, the Liberal Democrats said that once these plans were in place, they would move on to National Insurance (NI), where they would bring in the same threshold where no National Insurance is paid on the first £12,500 of a workers annual salary.

Danny Alexander, an MP for the Liberal Democrats praised the proposals by stating: "By cutting tax in this Parliament, cutting tax further in the next Parliament, and then moving on to National Insurance, we can make sure that over the course of a decade we shift the balance in the tax system - a generational shift - to help people in work".


Mr Alexander claimed that the proposals would benefit up to 26 million people in the UK, whilst an estimate by a BBC correspondent said that the majority of minimum wage workers would no longer have to pay income tax.

However, the Liberal Democrats would have to overcome some challenges should they get the opportunity to put their proposals in place. For example, the Independent Institute for Fiscal Studies said that the plans would cost the government around £3bn, and it remains to be seen how this money would be recovered.

Additionally, Arif Ansari of the BBC said they would also have the challenge of making sure the “win political credit from those who have benefitted”.

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