Deputy prime minister Nick Clegg and Treasury secretary Danny Alexander will meet with David Cameron and George Osborne today to demand more tax on high earners' pensions.
The Liberal Democrats will push the Prime Minister and his Chancellor to speed up the increase of the lower income tax threshold to £10,000, the Telegraph reports.
It is understood that Clegg and Alexander (pictured) will reveal to the Conservatives their plans to fund the tax break for lower earners with progressive taxes on the wealthy.
Reducing tax relief on pensions will be one of the proposals put forward by the Liberals, sources have claimed.
Alexander is likely to propose that higher rate tax-payers will only receive basic rate tax relief on their pension contributions, although Osborne is known to be opposed to the idea.
However, a compromise could be that only those earning more than £100,000, rather than those earning more than £45,000, will be stripped of higher rate tax relief on their pensions.
A deal like this would save the taxpayer £3.7bn per year.
Another main source of funding for the tax break on the lowest earners is the General Anti-Abuse Rule (GAAR) proposed in a report prepared for the Treasury in December.
Clegg has hinted the GAAR could be included in this year's budget.
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