Millions of families will have more money to spend for the first time in four years under income tax reforms, a senior Liberal Democrat said today.
Former Treasury minister David Laws emphasised that the financial squeeze on many households would end this year if the Government raises the starting rate of paying income tax.
But those with incomes of more than £61,000 could lose high rate pension tax relief to fund this tax change under the Lib-Dem proposals.
Millions of middle-income families with at least one higher rate tax payer will also lose child benefit next year.
The income tax threshold was raised by £1,000 to £7,475 for 2011/12 and the Lib-Con coalition is set to increase it to £8,105 this year. But the Lib-Dems are pushing for a faster rise towards the £10,000 goal.
"Household budgets have been falling in real terms since 2008," Mr Laws told BBC2's Newsnight.
He added that with inflation on a downward track there was an opportunity to allow "the household budgets of most people to start expanding again from later on this year".
