By Oliver Hotham
The 2012 budget will cut the 50p tax rate down to 45p, according to a report.
George Osborne is expected to say the current income tax top rate hampers growth as it discourages entrepreneurs and investors from doing business in the UK, the Telegraph newspaper reported.
Liberal Democrats, who are calling for the Budget to raise taxes on the rich, could allow the move in return for the implementation of a "tycoon tax", which would aim to fight tax avoidance.
Labour leader Ed Miliband said that despite the government's promises of fairness, "things are getting worse", for families across Britain - with a million young people now out of work.
He continued: "Instead, this government's priority appears to be cutting tax for people earning £150,000 a year."
Treasury officials say the new rate will raise more money than the old one, as fewer people will be inclined to avoid it.
The chancellor wants to have scrapped the top rate of tax scrapped by the next general election.
The 50p tax rate was first introduced by Alistair Darling and has been repeatedly criticised for its ineffectiveness.