Raise HMRC personal income tax allowance from £12,570 to £20,000 update '6 days to act'
By Google News Personal Finance ·
People have just 6 days to pressure the Andy Burnham government over frozen tax thresholds. In the budget last month Chancellor John Healey did not make a change despite calls.
A petition on the Parliament website is calling for the lowest level of tax - £12.570 - to be increased to £20,000.
People only have until Saturday November 14 to sign up - and if it reaches 10,000 signatures then the Treasury will be forced to respond and lay out its position and any possible change update.
The thresholds where people pay income tax have been frozen since 2021 and, under current plans, that will remain the case until 2031.
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This means some of the lowest-paid workers are being made to pay more and more tax in what is known as ‘fiscal drag’. The basic Personal Allowance in the UK is £12,570 for the 2026/27 tax year. This is the amount you can earn annually before you begin paying 20 per cent income tax.
The higher 40% rate kicks in at £50,271 and the additional 45% rate at £125,140. Independent data suggests a basic-rate earner (£20k–£50k) pays roughly £700 to £800 more tax per year purely due to the freeze.
The Petition, created by Wade Reid says: “The personal allowance has been frozen while living costs have risen, meaning workers pay more tax in real terms. Increasing it to £20,000 would put more money into millions of workers’ pockets, helping with rising bills and supporting low and middle earners.
“The personal allowance has been frozen since 2021 while living costs have risen sharply, meaning workers are paying more tax in real terms. As wages increase slightly to keep up with inflation, more people are pulled into paying tax or higher rates.
Increasing the threshold to £20,000 would put more money into millions of workers’ pockets, ease financial pressure, and support low and middle earners during a cost of living crisis.”
Mr Healey did not make any changes to the allowances in the Budget - but he did tell ITV viewers there were potential ‘bigger changes’ on the way. On his ITV show, personal finance guru Martin Lewis read out a question from viewer Michael: “Will the Chancellor be honest and admit he’s raising taxes on working people by stealth by continuing the freeze on tax thresholds? He is being totally disingenuous.”
Martin asked: “When will you raise tax thresholds?” Mr Healey said: “Well, our promise was not to raise rates across the board and this was a budget unlike in some previous years where I rejected the idea of broad-based tax rises because it isn’t just businesses, it’s individuals and households that are under pressure.
“So where I could avoid that, I decided I should do that. And it was a budget, if you step back, that was designed to take action where we could just to help take a bit of pressure off people, give people a bit of breathing space, which we’ve done, especially on energy. And it was a budget also designed to try and do that a bit for business.”
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“So where I could avoid that, I decided I should do that. If you step…
Originally published by Google News Personal Finance
