Davey promises tax cuts for millions if UK rejoins EU single market

The Liberal Democrats will fight the next general election on a promise to cut taxes for millions of workers, Sir Ed Davey has said in a speech to his party conference.

The Lib Dem leader said that if he gained power, he would raise the annual tax-free personal allowance to £15,000.

He would also raise the 40p income tax threshold from £50,270 to £56,000, in a £17bn package funded by the economic boost he says would come from the UK rejoining the EU single market and customs union.

He claimed the plan would mean a £680 cut for "most taxpayers" but it would not come into full effect until the fifth year of a Lib Dem government - potentially up to eight years away.

The announcement was greeted with sustained applause by Lib Dem MPs and activists in the Brighton conference centre.

The £12,570 income tax allowance was frozen by the Conservatives in 2021, resulting in more people being dragged into paying the tax, and Labour has so far resisted calls from trade unions and some of its MPs to unfreeze it.

The Lib Dems said they would raise the threshold to £15,000 a year, and increase the starting point for paying employee National Insurance (NI) to the same level.

At their conference earlier this month, Reform UK promised to increase the income tax personal allowance to £15,000 within 100 days if they won power.