George Osborne will use Wednesday’s Budget to announce a clampdown on “taxpayer-funded subsidies” for “higher earners” living in social housing.
Local authority and housing association tenants in England who earn more than £30,000 – or £40,000 in London – will have to pay up to the market rent for their property, he is due to say.
The move is expected to raise up to £250m a year by 2018-19.
It is thought that this could affect 340,000 households.
The expected change – which will cost tenants on average up to £70 extra a week – will build on measures introduced under the coalition government that enabled housing associations and local authorities to charge market rents to those on incomes of more than £60,000.
Extra money from those living in local authority properties will go straight to the Exchequer.
‘Matter of fairness’
Writing in The Sun on Sunday, Mr Osborne – who is expected to set out further details of the government’s planned £12bn in welfare cuts – said the Budget would “reward work over welfare” and allow people to keep more of the money they earned.
“We’ve also decided it’s time to act on the higher earners who use taxpayer-funded subsidies to live in council and housing association homes when they could afford the market rent that others on their salaries pay,” he wrote.
“It’s a simple matter of fairness. The welfare system I want to see is one that helps people to get good jobs instead of giving them handouts.”
The Budget will also confirm the end of inheritance tax on family homes worth up to £1m.
Mr Osborne is expected to tell MPs on Wednesday the threshold at which the tax is levied will rise for couples from £650,000 after April 2017.