The Prime Minister has promised to raise the tax threshold for low earners and the higher rate of tax in a speech to the Conservative Party conference.
David Cameron said the tax changes would come in if the Tories win next year’s elections and would affect some 30m people. He pledged to raise the tax-free allowance from £10,500 to £12,500 by 2020 which he said would increase by one million the number of low earners who don’t pay any tax and decrease tax for some 30 million other workers. He also said the threshold for the higher rate 40p taxation rate would be raised from £41,900 to £50,000 by 2020. This would save those on £50,000 £1,600 a year.
The Institute for Fiscal Studies calculates that the tax changes would cost £7.2bn. the combined costs of the tax changes would be £7.2bn.