Voters would see lower income tax bills under a Liberal Democrat government if party leader Ed Davey secures his plan, which the party says would cost £17bn and be paid for by growth from rejoining the EU single market and customs union.
Davey set out that the change would eventually raise the personal allowance to £15,000 and lift the point at which the 40p rate kicks in by roughly £6,000, with a smaller uplift to the 45p additional rate payable above £125,000. The party says the cuts would not be enacted until the final year of a parliamentary term, which it admits could be as late as 2034; in earlier years thresholds would be indexed to inflation to hold them steady in real terms.
The funding case rests entirely on the economic boost the Lib Dems say would follow from restoring close trading arrangements with the EU. The party cites analysis from an independent economics consultancy that it says predicts a 0.5% increase in growth in the first fiscal year after a swift deal. Davey acknowledged that securing such an agreement will take time and could be complicated if rightwing populists make progress in more EU states.
The tax pitch is framed as an appeal to households squeezed by living costs and as a way to win back former Conservative voters. Advisors argued the move could help the Lib Dems contest more than 60 Tory seats won in 2024, but the proposal has prompted private unease among some Liberal Democrat MPs who want a broader, more ambitious platform for the party.
Other policy measures in the leader’s conference speech included a proposal for an international non-proliferation style treaty to curb development of super-intelligent AI. Davey also spent part of his address warning about the rise of the far right, linking well-funded movements and prominent backers to a threat he said must be resisted. He contrasted the Lib Dem tax approach with Reform UK’s plan to raise the personal allowance to £15,000, accusing that party of pairing tax cuts with steep social security savings; he pointed to the £72m Reform has received from two crypto billionaires as evidence of its funding sources.
Davey closed by stressing the party’s aim to combine tax relief with protections for vulnerable people, arguing voters want immediate cost-of-living help and a clear economic plan for growth tied to closer ties with the EU.
