Budget Preview : Income Tax
In the forthcoming coalition government budget we are likely to see a major change in the UK income tax system although it will be staggered over a number of years. It would appear that the Conservative party has compromised in relation to the personal income tax allowance and the long-term aim will be to introduce a Liberal Democrat style target of 000 which would take 3.6 million people out of the UK income tax system.
While the rise in the tax-free allowance would also in theory benefit those on larger incomes there is speculation that the government will tinker with the tax regime at the higher end of the scale to ensure those on higher incomes are no better off. The cost of this particular policy, to increase the allowance from 75 to 000 in due course, would be around billion and lead to spending cuts or tax rises elsewhere.
It will be interesting to see how the Labour Party reacts to this particular policy which is very much in favour of those on lower incomes. While this is a policy which would not normally be associated with a Conservative government it does show how far David Cameron was prepared to move to grab the keys to number 10!
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