GEORGE Osborne made a pitch for the middle class vote as he took 138,000 people out of paying the higher tax rate of 40p.
The measures - which also removed the tax on passing on supersaver ISA accounts to a spouse when somebody dies - came after months of pressure from Tory backbenchers who have been increasingly concerned about discontented middle class voters switching their support to Ukip.
And winning the middle class back has been identified as key to the Tories regaining power in May next year.
Presenting his Autumn Statement the Mr Osborne declared that a £9 billion tax raid on the rich showed that the country is “all in it together”.
But his own figures revealed that the hardest hit are the top 20 per cent of earners losing an average of 3.1 per cent of their incomes and the bottom 20 per cent worse off by 2.1 per cent.
However, the middle 20 per cent had no change in the overall incomes while the second highest 20 per cent were 0.3 per cent better off.
The Chancellor had been under pressure from Tory backbenchers to begin work on raising the point where people pay the 40 per cent threshold and for the first time passed on a £100 rise in the basic rate personal allowance to £10,600 to the higher rate.
This means that the starting point for paying the 40p rate rises from £41,865 this year to £42,385 next year.
Referring to the pledge made by Prime Minister David Cameron in his conference speech, the Chancellor said: “This is a down payment on our commitment to raise the higher rate threshold to £50,000 by the end of the decade.”
His announcements on stamp duty were also aimed at helping middle class home buyers who will pay less tax on a new property up to £925,000.
He also helped out families with holiday budgets by removing air passenger duty for under-12s and promising to extend the exemption to under 16s.
But Labour shadow Chancellor Ed Balls said families were worse off by an average of £1,600 as a result of Mr Osborne’s policies.
He said: “Working people are now £1,600 a year worse off than they were in 2010.
“Someone in full-time work is now £2000 a year worse off.
“Mr Speaker, for working people there is a cost-of-living crisis.
“And that squeeze on living standards is not only hitting family budgets.”