A new online petition is calling on the UK Government to increase the Personal Allowance from £12,570 to £20,000, arguing that the current threshold no longer reflects the rising cost of living. Petition creator Wade Reid argues that the change would leave millions of workers with more money in their pockets, helping households manage rising bills and providing greater support for low and middle earners.
Petition Details and Rationale
Posted on the UK Parliament petitions website, the petition states: '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 petition adds: '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.'
Current Personal Allowance and Fiscal Drag
The Personal Allowance is the amount most people can earn each tax year before they start paying income tax. It currently stands at £12,570 and applies to employees, self-employed workers and many pensioners with taxable income. People only pay income tax on earnings above the Personal Allowance rather than on their entire income. For most workers, earnings above £12,570 are taxed at the basic rate of 20 per cent until they reach the higher-rate threshold.
The Personal Allowance has been frozen at £12,570 since April 2021 and will remain at that level until April 2031. While income tax rates have not changed, wages have generally increased over the same period, meaning more people have started paying income tax or are paying tax on a greater proportion of their earnings. This process is commonly known as fiscal drag. It happens when tax thresholds remain unchanged while earnings rise, bringing more people into the tax system without the UK Government having to increase tax rates.
Potential Impact of the Proposed Increase
If the Personal Allowance were increased to £20,000, someone paying the basic rate of income tax could keep up to £1,486 more of their earnings before tax became payable compared with the current threshold. However, there are currently no UK or Scottish Government plans to increase the Personal Allowance to that level.
Next Steps for the Petition
The 'Increase the personal tax allowance threshold to £20,000' petition has been posted on the Petitions Parliament website. At 10,000 signatures of support, it will be entitled to a written response from the UK Government; at 100,000 it would be considered by the Petitions Committee for debate in Parliament. Readers who want to support the proposal can add their name to the petition through the UK Parliament petitions website while it remains open for signatures until November 14.
