George Osborne wants to raise the tax-free personal allowance

The allowance – the amount people must earn before they start paying income tax – is already set to rise from £10,000 to £10,600 on April 6, when the new financial year starts.

Now reports suggest the Chancellor is keen to raise the threshold by at least £200, from next month, taking it to £10,800 and saving basic rate taxpayers up to £160 a year.

This week the coalition will hammer out a final figure to appear in its last Budget before the May 7 general election.

A senior source said: “The focus will be on lifting the poorest out of tax. We want to move towards £11,000.”

The Budget is also expected to bring extra cheer for drinkers, with duty cuts on Scotch, cider and beer.