Clegg Says U.K. Tax Threshold Should Rise to 10,500 Pounds

Deputy Prime Minister Nick Clegg said the coalition government should raise the amount workers in the U.K. can earn before paying income tax to 10,500 pounds ($16,925) a year.

The threshold, which is due to rise to 10,000 pounds in April 2014, should increase by a further 500 pounds a year later to help people on low incomes, the Liberal Democrat leader said. He called for an announcement to be made in the 2014 budget.

“We need to go further because as the recovery is finally taking hold it’s very important that as many people as possible feel they are benefitting,” Clegg told BBC Television’s “Andrew Marr Show” program today. It would deliver a tax break “for millions of people who are working hard and seeking to make ends meet,” he said.

Clegg and Prime Minister David Cameron have steadily raised the threshold from 6,475 pounds since taking office in 2010 to its current level of 9,440 pounds. If adopted, Clegg’s proposal would take effect a month before the next general election.

It would cut 100 pounds a year from the tax bill of people earning more than 10,500 pounds and remove about 500,000 more people from taxation altogether, Clegg said. The cost to the Treasury would be about 1 billion pounds a year, he said.

Clegg said the proposal had not been agreed with Cameron, whose Conservative Party opposes Liberal Democrat calls for a “mansion tax” on the most expensive homes. The two parties could find other ways to pay for a higher income-tax threshold, including a further clampdown on tax avoidance, Clegg said.

The announcement comes as Chancellor of the Exchequer George Osborne prepares to announce his Autumn Statement to Parliament on Dec. 5.

Wages Lag

The cost of living has become the focal point of British politics, with consumer prices continuing to increase about three times faster than wages. Clegg’s electoral pitch aims to convince voters that another coalition is desirable and viable, as his party is unlikely to ever command power on its own.

The opposition Labour Party leads the Conservatives by 35 percent to 29 percent, with the Liberal Democrats on 10 percent, according to the latest ComRes Ltd. poll. The survey questioned 2,023 adults between Nov. 13 and Nov. 15.

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