George Osborne is planning a pre-election boost for hundreds of thousands of workers by announcing a further increase to the income tax personal allowance.
The Chancellor will raise the personal allowance threshold to £10,600 in the next year, £100 more than initially planned.
The Liberal Democrats have told David Cameron they will refuse to form a coalition with the Conservatives unless he commits to tax hikes for the middle classes, Nick Clegg has said.
Prime Minister David Cameron has said the Conservatives will raise the 40% tax threshold from £41,900 to £50,000 if they win the 2015 General Election.
Many middle-class professionals are paying an income tax rate of 60% as a result of a little-understood policy introduced by the last Labour government which affects more than 500,000 people, a leading economist has warned.
George Osborne has denied ‘insulting' middle-class voters by claiming that making them pay higher tax rates is ‘good for them' because it makes them feel successful - and more likely to back the Tories.
What do advisers want from this year's Budget?
More than a million extra middle-income workers will have been dragged into the 40p tax bracket by next year because of George Osborne's plans to boost income for the low-paid.
A higher threshold for income tax will be the Liberal Democrats' top priority at next month's Budget, deputy Prime Minster Nick Clegg will say today.