The Liberal Democrats believe you should keep more money that you earn. That is why we believe the tax-free threshold should raise to £10,000, saving working people £700 a year and making sure millions of the lowest paid workers don’t have to pay any income tax at all.

Between now and the Budget, Nick Clegg and the Liberal Democrats in Government will be arguing for faster tax cuts for hard-working families, promoting work and growth, and rewarding innovation, paid for by increasing the amount paid by the richest.

And the Liberal Democrats in Coalition are already making the difference:

  • More than 800,000 working people no longer paying income tax
  • 23 million working people have been given a £200 tax cut
  • In April this year every worker will be given a further income tax cut of £130
  • And by the local elections in May this year, 1.1 million of the lowest paid workers, will no longer be burdened by income tax

Imagine a mum who works 3 days a week as a teaching assistant – earning £10,000 a year or just over £190 a week. Under Labour she paid more than £1,000 in income tax and national insurance. Although she wanted to work more days a week she knew it was not financially worth it. Under Labour; once tax, tax credits and housing benefit has been deducted, for every extra pound she earned she was able to keep just 10.5p.
Under our plan she would see her income tax bill cut to zero making her £700 a year better off.


The Liberal Democrats are committed to delivering a fairer economy, turning our tax promise into cash in your pocket. It was on the front page of our manifesto and is being implemented because of Liberal Democrats in Government.

As part of this Coalition, Liberal Democrats are calling time on our unfair and out-of-whack tax system.

  • We’ve clamped down on tax avoiders – targeting an extra £7bn every year
  • We’re taxing the banks by an extra £2.5bn every year
  • We’ve stopped inheritance tax cuts for millionaires
  • We’ve put up Capital Gains Tax
  • We’re ending the scandal, under Labour, of a hedge-fund manager paying less tax on their shares than their cleaner paid on their wages
  • We’ve reduced tax breaks on pension funds for the super-rich
  • We have retained the 50p rate
  • And our overall priority is freeing the lowest-paid from income tax altogether and cutting income tax for millions of ordinary workers

You can read Nick’s speech to the resolution Foundation here.