LONDON—The U.K. Independence Party, the small euroskeptic party knocking on the door of Parliament here, laid out its strategy Friday for the coming general election in a pitch for the blue-collar vote with planned income-tax cuts.

The proposed cuts outlined by UKIP leader Nigel Farage at his party's annual conference is part of his effort to try and draw votes away from the center-left opposition Labour Party as well as from Prime Minister David Cameron's center-right Conservative party, with which it shares many political sympathies.

The party—known for its anti-Europe and tough-on-immigration stance—doesn't currently hold any parliamentary seats. But it could be on the verge of a domestic electoral breakthrough as political analysts expect the party to win its first elected U.K. parliamentary seat in a by-election in the eastern English coastal town of Clacton next month.

The party already scored a coup when Douglas Carswell, a lawmaker from the prime minister's Conservative Party, made a surprise defection to UKIP a few weeks ago. At the time, he stood down as a member of Parliament saying he would contest it for UKIP at the by-election on Oct. 9—the prime minister's birthday. The winning of the seat in an election would be a boost for the party's credibility.

But the party is often accused of being a one-issue party, so Mr. Farage has been trying to show he has policies in other areas—including the economy.

At its annual conference in Doncaster, Mr. Farage said his party would raise the amount people can earn before they have to start paying income tax to £13,500 ($21,964) from the current level of £10,000, a cut in the middle rate of tax, and scrap inheritance tax altogether. He also proposed introducing a tax on the turnover of large companies and said it wanted to investigate imposing a new rate of value added tax for luxury goods—with a suggestion of thresholds above £200 for a pair of shoes, £1,000 for a bag, or £50,000 for a new car.

"Why are we in Doncaster? Well it's quite simple, because Ed Miliband is one of the town's MPs and we want to signal to the world that we are now parking our tanks on the Labour Party's lawn," UKIP leader Nigel Farage said in his conference speech as he mocked Mr. Miliband's admission that he had forgotten to mention the budget deficit in his conference speech on Tuesday.

UKIP has existed on the fringes of the U.K.'s political scene since it was formed to campaign for the U.K.'s exit from the European Union in the early 1990s. But it has seen a rapid surge in support over the past couple of years by tapping into blue-collar concerns about issues such as immigration and a growing disenchantment with the political establishment.

The party secured its greatest electoral triumph to date in May when it beat the Conservatives and the opposition Labour Party in the European Parliament elections, with a "none of the above" pitch that appealed to voters' irritation with the three largest parties in Westminster.

However, only about one third of the electorate vote in those elections, prompting question of whether UKIP can replicate that success in a national election where voters will be much more interested in what parties offer.

UKIP also is contesting a by-election in the northern English constituency of Heywood and Middleton, a stronghold of the opposition Labour Party, on Oct. 9. It isn't expected to win, but a second place would highlight its broad electoral threat.

"Nationally the broader agenda in British politics is very favorable for a radical-right tea party-type movement," said Matthew Goodwin, an academic and associate fellow at Chatham House—a U.K.-based think tank. "Trust in politics generally is very low, concerns over social and cultural issues like immigration are very high, and now you have UKIP about to win representation in the House of Commons which will help the party to push back on the argument that it is a wasted vote and is not a credible alternative."

Mr. Farage's push comes as Mr. Cameron faces divisions in his party over the Europe issue. While the prime minister says he wants the U.K. to remain part of the EU—in large part because he believes it is in the best interest of U.K. business—there are some Conservatives who want to exit.

Tory leaders have been publicly dismissive of UKIP in the past. Mr. Cameron in 2006 dismissed the party as "fruitcakes, loonies and closet racists." But the growing support for UKIP has forced the Conservative Party to take the party seriously. UKIP's greatest threat is its potential to act as a spoiler in close-run seats with its ability to draw votes primarily from the Conservatives—and from Labour.

"My rule of thumb is if the UKIP national vote is in double digits—10% or 11%—that is probably very bad news for the Conservatives because it means they may well be seeing 4,000 or 5,000 votes locally go to UKIP…and therefore might make it easier for Labour to win more of those seats," said Peter Kellner, the president polling company YouGov PLC.