LONDON, March 22 (Reuters) - Britain's budget on Wednesday will raise the threshold under which workers do not have to pay income tax above 8,000 pounds from 2012 and will also give help to first-time homebuyers, a government source said on Tuesday.
The threshold increase of about 600 pounds next year comes on top of a planned rise of 1,000 pounds ($1,639) from April this year under measures by the Conservative-Liberal Democrat coalition government to ease the tax burden on the low paid.
The threshold, or personal allowance, is set to rise to 7,475 pounds this fiscal year from 6,475 pounds in 2010/11.
'This is another step towards taking more people out of tax altogether,' the source said.
Taking the threshold above 8,000 pounds is expected to save 25 million people about 45 pounds per year, at a potential cost to the Treasury of more than 1.1 billion pounds.
The source, familiar with budget preparations, said the government and the Britain's building industry would also offer a package worth 250 million pounds to help first-time buyers get a foot on the housing ladder.
Under the deal, buyers will receive a loan worth 20 percent of the value of the property -- the bulk of a deposit needed to get a mortgage.
The loan will be interest free for the first five years, rising to 1.75 percent interest in year six and then increasing to an interest rate of retail price inflation plus one percent, the source said.
Finance minister George Osborne is expected to stick to his austerity plans on Wednesday, aiming to all but eliminate a record budget deficit -- about 10 percent of national output -- by the time of the next parliamentary election in 2015.
(Reporting by Matt Falloon; Editing by Andrew Hay) ($1=.6103 Pound) Keywords: BRITAIN BUDGET/TAX (UK Economics desk, uk.economics@reuters.com, Tel: +44 207 542 7947) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The threshold increase of about 600 pounds next year comes on top of a planned rise of 1,000 pounds ($1,639) from April this year under measures by the Conservative-Liberal Democrat coalition government to ease the tax burden on the low paid.
The threshold, or personal allowance, is set to rise to 7,475 pounds this fiscal year from 6,475 pounds in 2010/11.
'This is another step towards taking more people out of tax altogether,' the source said.
Taking the threshold above 8,000 pounds is expected to save 25 million people about 45 pounds per year, at a potential cost to the Treasury of more than 1.1 billion pounds.
The source, familiar with budget preparations, said the government and the Britain's building industry would also offer a package worth 250 million pounds to help first-time buyers get a foot on the housing ladder.
Under the deal, buyers will receive a loan worth 20 percent of the value of the property -- the bulk of a deposit needed to get a mortgage.
The loan will be interest free for the first five years, rising to 1.75 percent interest in year six and then increasing to an interest rate of retail price inflation plus one percent, the source said.
Finance minister George Osborne is expected to stick to his austerity plans on Wednesday, aiming to all but eliminate a record budget deficit -- about 10 percent of national output -- by the time of the next parliamentary election in 2015.
(Reporting by Matt Falloon; Editing by Andrew Hay) ($1=.6103 Pound) Keywords: BRITAIN BUDGET/TAX (UK Economics desk, uk.economics@reuters.com, Tel: +44 207 542 7947) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.