Lib Dem Tax Cuts Unlikely After UK's Credit Rating Questioned

Liberal Democrats are unlikely to see their priority of the income tax threshold rising to £10,000 in the chancellor's next budget, after a question mark was placed over Britain's credit rating.

Moody's, the credit rating agency, put Britain on negative watch, raising doubts about the country's ability to maintain its AAA credit rating.

Raising the personal tax threshold to £10,000 is in the coalition agreement, but there are questions over how much of a priority it should be after doubts were raised over the state of the country's finances.

Lib Dem leader and Deputy Prime Minister Nick Clegg recently called on the Treasury to "go further and faster" in raising the threshold.

"It is a coalition agreement commitment so it is going to happen, [but it] did not have a time frame for the move to the £10,000 threshold," a Treasury spokeswoman said.

She added that there would be a rise in the threshold in the budget, but that she could not speculate on if it would be up to the £10,000 mark.

The income tax threshold is currently at £8,105, after being raised in two consecutive budgets since June 2010.

"This is something Nick has said is a priority for us as a coalition partner in the government," a Lib Dem spokeswoman said.

However, she added, the decision on when to raise the threshold to £10,000 "depends entirely on where the Treasury is at at the moment".