George Osborne is poised to slash the top rate of income tax from 50p to 40p in next week's budget in a dramatic move that will delight business and the Tory right, but risks reinforcing the Conservatives' reputation as protectors of the super-rich.

With the four senior ministers in the budget discussions due to speak on Friday and a final meeting scheduled for Monday, the Liberal Democrats appear to recognise that they are not going to be able to block what is Osborne's key demand for the budget, but are trying to maximise the concessions they can extract in return.

Government sources say that from the outset the chancellor has seen a cut in the 50p rate as the headline-grabbing measure of the budget, and views it as the simplest single step he can take to show his commitment to an enterprise economy.

A preliminary study conducted by HM Revenue & Customs for the Treasury, due to be published next week, is expected to show that the 50p rate – introduced by Labour in 2010-11 for those earning more than £150,000 a year – is bringing in hundreds of millions, rather than billions, of pounds. An earlier Treasury study assumed it would raise £2.6bn. Before 2010, the top rate had been at 40p since 1988.

In return for supporting the measure the Lib Dems are pressing for a large increase in the personal allowance for those in work, a commitment to a wealth tax based on property, and a series of measures that end tax reliefs for the rich. They are also making it clear that the distributional effect of the budget as a whole must be seen to be progressive in that the rich pay more than the poor.

But they are likely to recognise that the headline cut in the top rate of tax will be the focus of the media. Nick Clegg will have to make a judgment on the political damage the abolition of the top rate might cause his party, and that in part will be shaped by the overall package on the rich developed by the Treasury.

It is understood that the drive to cut the top rate is coming from Osborne as much as David Cameron. The chancellor has, sources say, been intellectually persuaded of the case for a cut in the top rate, a move that will endear him to the Tory right.

A government source said: "The budget has to strike a balance. It has to show we are all in this together, but it also has to show that as a country we are open for business. We want a top rate that does not put off entrepreneurs or businesses. It is one of the highest top rates worldwide at a time when we need real growth. Above all, real growth is what we need to promote wealth and prosperity." The source said the deal on the 50p was not yet done and dusted, but was close to being so.

It was being argued that with the Lib Dems insisting in public that the centrepiece of the budget must be an increase in the personal tax allowance, Osborne was always likely to insist on an equally distinctive Tory measure being included.

Clegg has called for the budget to factor in the long-term goal of a £10,000 personal tax allowance by the next general election. The allowance currently stands at £7,475 and is already due to rise by £630 in April. The cost of the measure could be offset by not increasing the allowance for higher-rate income taxpayers, a move that has the disadvantage of pushing more people into the higher rate band.

Writing in the Guardian, Clegg's close aide David Laws and the Lib Dem president, Tim Farron – representing left and right in the party – make no direct reference to the 50p tax cut negotiations, but set two tests for the party's approach to taxing the wealthy in the budget.

The first is that the package must "not represent a net tax giveaway to those at the top – indeed the super-rich should in total contribute more".

They add: "Now is not the time for a repeat of Nigel Lawson's 1988 budget, which gave away billions to the richest. If this was controversial in the boom of 1988, when the budget was in balance, it would be indefensible in the austerity of 2012."

Their second test is the efficiency of the taxes on the rich. They point to OECD studies suggesting that high marginal rates of income tax can be inefficient, noting that in the UK tax receipts from the top 1% come from those being paid more than £500,000 a year. "These people have good accountants. If loopholes are available, they will be used," they argue.

Setting out the final Lib Dem public negotiating position before the budget decisions, they write: "Whatever decisions George Osborne makes on individual taxes, here is what he could do.

"First, clamp down hard on avoidance – with specific measures, including on stamp duty, and a tough, new, general anti-avoidance rule. Second, make it harder for wealthy foreigners to shelter their money from tax. Tax wealth – including property – more.

"And third, stop some of those in the top 1% from paying such a tiny share of their income in tax (think Mitt Romney's 13.9% tax rate!). Nick Clegg's proposal for a 'tycoon tax', a basic minimum rate of tax on all income, is a very good idea."

• This article was amended on 16 March 2012. The original said that before 2010, the top [tax] rate had been at 40p since 1998. This has been corrected. In addition, reference was made to a preliminary study conducted by Customs & Excise. This has also been corrected.