Clegg wants personal allowance rise after election

7 Oct 14
The income tax personal allowance would go up £500 to £11,000 in 2016/17 if the Liberal Democrats form part of the next government, Deputy Prime Minister Nick Clegg has said.

By Richard Johnstone in Glasgow | 7 October 2014

The income tax personal allowance would go up £500 to £11,000 in 2016/17 if the Liberal Democrats form part of the next government, Deputy Prime Minister Nick Clegg has said.

Cash

Ahead of his conference speech tomorrow, Clegg committed to increase the threshold at which tax is paid – which has risen from £6,475 in 2010/11 to £10,000 in the current year and £10,500 in 2015/16 – as part of plans to let people keep more of their own money.

It is estimated that the change would equate to a tax cut of around £100 for 20 million working people. Clegg said the increase, to be confirmed in next year’s Autumn Statement, would be the first step in meeting the LibDem pledge of raising the threshold to £12,500 in the next parliament. Raising it to £10,000 was a LibDem commitment at the last election.

‘We have cut your taxes in this parliament and we will continue doing just that in the next,’ Clegg said.

‘It’s easy to promise a tax cut, but it’s much more difficult – especially in the current economic situation – to say who pays. We are clear that we will pay for this tax cut for millions of working people by asking wealthier people to contribute more.’

In particular, the party proposed to increase the rate of Capital Gains Tax for higher earners to raise more revenue. This is currently paid at 28% for those earning £31,866 and above, and the LibDems said that this would be increased to the ‘revenue maximization point’ where it would raise most funding. An early indication from the Treasury has found that this may be around 35%, an increase which would be expected to raise £500m a year.

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