Osborne set to raise tax threshold - The Press Association

(UKPA) – 3 hours ago

Chancellor George Osborne is expected to take hundreds of thousands more low earners out of income tax by raising the threshold to around £8,000 in his Budget on Wednesday.

Expectations of another increase in the threshold - raised from £6,475 to £7,475 last year - were heightened by Treasury Chief Secretary Danny Alexander, who said the Budget would set out "further real progress" towards the ultimate goal of taking anyone earning less than £10,000 out of income tax.

Mr Osborne gave a strong hint that he will act to hold down fuel duty, promising motorists struggling with record prices of £1.30 or more a litre: "I will do what I can to help." His comment will fan speculation that he will cancel a 1p rise in the duty scheduled for April 1.

The Chancellor revealed that the Budget will include measures to help unemployed youth by creating "the most apprenticeships this country has ever seen", funded using part of the revenue from the Government's levy on banks.

Last year's increase in the income tax threshold will come into effect in April, handing £200 to all basic-rate earners and taking around 880,000 out of the tax altogether. A further increase is expected to be introduced in 2012 as another step on the way to the Liberal Democrat priority of making the first £10,000 of earnings tax-free.

Mr Alexander told The Observer: "There is nothing more fundamentally liberal than saying those who work but receive least reward should pay no tax. That's why, when the Government unveils its Budget on Wednesday, we will set out further real progress towards our goal of taking anyone earning less than £10,000 out of tax altogether."

Writing in the News of the World, Mr Osborne gave his strongest signal yet that he will postpone the 1p fuel duty hike announced in his Labour predecessor Alistair Darling's final budget.

The Chancellor said he knew that rising oil prices had "hit people's pockets hard when they fill up their car - and now we've got another one penny rise in petrol duty, above inflation, that the last Labour government planned for April". "I can't promise things the country can't afford, but I've listened to families and I will do what I can to help."

Mr Osborne has said that the March 23 Budget will mark the point at which the Government moves "from rescue to reform", building on its drive to reduce Britain's deficit with pro-growth measures to boost GDP.

Shadow chancellor Ed Balls called on Mr Osborne to use the Budget to rethink his programme of spending cuts, which he said was undermining the UK's fragile economic recovery. Writing in the Independent on Sunday, the shadow chancellor asked: "Will he have the courage and common sense to rethink his deficit reduction plan? Will he repeat Labour's bank bonus tax to create jobs? Or will he dig the country deeper into the hole of stagnation?"

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