Budget 2012: Tax allowances set to rise further
The chancellor is expected to announce an increase in the amount people can earn before they start paying tax in his Budget later.
George Osborne is also set to unveil a cut in the top rate of tax from 50p to 45p, but not for a year.
The government insists it is not giving a net tax cut to the rich because money will be clawed back by reducing tax avoidance and raising property taxes.
But Labour say the chancellor should be helping ordinary families instead.
Mr Osborne will unveil his third Budget in the House of Commons at 1230 GMT.
The threshold at which anyone pays income tax is set to increase to over £9,000 next year, which would leave the average standard rate taxpayer £305 a year better off.
Ministers lifted the tax threshold by £1,000 to £7,475 in April 2011, meaning the first £7,475 of people’s income is not liable for tax.
A further £630 increase to £8,105 was due next month and while the coalition has pledged to ultimately raise the threshold to £10,000 by 2015, the Lib Dems have been pushing for “further and faster” action on what is regarded as a flagship policy.