Tax-free allowances 'could rise to £10k'

Date: 7th January 2009

The personal taxation allowance could soon rise to £10,000 under new government proposals, a report has claimed.

According to the Mirror newspaper, the prime minister Gordon Brown is considering the plans not only to help families struggling in the downturn, but also to spur consumer spending.

The tax-free allowance currently stands at £6,035, but the chairman of the commons treasury committee John McFall, believes this could be set to change in the near future.

Mr McFall told the Mirror: "We should put money into the pocket of those with the lowest incomes. These are the people who most need our support.

"This would also be a fiscal stimulus since this group is most likely to spend rather than save."

Over the weekend, the leader of the Conservative Party David Cameron revealed plans to scrap income tax on savings for those with earnings in the basic rate bracket.