George Osborne
George Osborne poses with the red box before delivering his election budgetReuters

UK Chancellor George Osborne has revealed a bigger-than-expected rise in the personal income tax allowance to £11,000 in his final budget before May's general election.

The personal tax allowance was already due to increase to £10,600 next month and the Chancellor said it would rise to £10,800 next year and £11,000 the year after.

"It means the typical tax payer will be £900 a year better off," Osborne said.

The tax cut could affect as many as 27 million people and Osborne hopes it could go some way to boosting the Conservatives' standing in lower-income households. Osborne said it would mean four million people would pay no income tax at all.

Osborne courted voters from outside of the traditional Tory base on Wednesday and defend the government's record on economic disparity in the UK.

"We have created a fairer tax system," Osborne said in a passage of his speech devoted to inequality, "we are all in this together".

"The lower paid 50% of tax payers are now pay a smaller proportion of income tax than at any time under the previous government," Osborne said, stressing that the economic recovery was nationwide.

Raising the personal allowance means workers would not have to pay income tax on their earnings below the new higher threshold. It essentially makes a bigger part of income earned tax-free.

The policy has been championed by the Liberal Democrats, the junior partner in the coalition government, but re-appropriated by the Conservatives ahead of the General Election.