British Prime Minister David Cameron's Conservative Party is planning to raise the personal tax allowance to 12,500 pounds as part of an election pledge in 2015, the Financial Times reported on Sunday.
The paper, citing unnamed Tory government ministers, said the move would have more impact on the cost of living than the "tinkering with energy bills and rail fares."
The Financial Times said top officials expect the tax-cuts would allow the conservative party to appeal to core voters who would benefit.
Prime Minister David Cameron has been trailing behind his opponent Ed Miliband in opinion polls after the opposition leader pledged to freeze energy prices if he came to power in the next election.
(Reporting by Tasim Zahid in Bangalore; Editing by Diane Craft)