Incoming Prime Minister Andy Burnham has hinted at a possible increase in the UK personal tax allowance from its current frozen level of £12,570 to £18,000, following widespread public pressure. In an interview with The Times, Burnham stated that the frozen threshold was “the thing I heard the most on the doorsteps” during the Makerfield by-election campaign. The current allowance has been frozen since 2021, and Chancellor Rachel Reeves extended the freeze until 2031 in last November’s Budget.
Petition Gains Momentum
A petition on the Parliament website calling for the threshold to be raised to £18,000 has garnered nearly 38,000 signatures. If it reaches 100,000, it will be considered for a parliamentary debate. The petition argues: “Raise the personal tax allowance to £18,000. Since 2021 personal tax allowance has been frozen at £12,570. This freeze was due to expire this year but the Chancellor of the Exchequer has extended it to 2031. We want to keep some more of our own money.” It highlights that minimum wage earners may soon face tax due to fiscal drag, while some higher earners use accounting rules to pay little or no tax.
Fiscal Drag and Impact on Workers
The freeze has drawn criticism for dragging more people into tax as wages rise with inflation. By 2030, an estimated 780,000 people will pay income tax for the first time, while 920,000 will enter the higher-rate band and 4,000 will be pushed into the 45% additional rate. The basic tax rate of 20% applies to earnings above £12,570, and the higher rate of 40% applies above £50,270—both thresholds frozen since 2021. Projections suggest that by 2027, the new state pension will exceed the £12,570 threshold due to the triple lock, potentially increasing tax liabilities for pensioners.
Burnham’s Stance on Taxation
Burnham addressed perceptions of him as a tax raiser, telling The Times: “So when people, they’re just characterising me as a tax raiser, well again it’s never that simplistic is it? The breathing space point is a really serious one. How do we just make people feel better?” He emphasised a focus on “early investment” to “set people up for success” rather than paying for failure. Burnham has not yet named his Chancellor, with Rachel Reeves expected to leave, and Shabana Mahmood and Ed Miliband tipped as contenders. The new Chancellor will face pressure from the campaign to raise the allowance to £18,000.
Previous Petitions and Treasury Response
An earlier petition calling for a £20,000 threshold attracted 281,792 signatures before closing. The Treasury responded: “The Government currently has no plans to increase the Personal Allowance to £18,000. Increasing the Personal Allowance to £18,000 would come at a significant fiscal cost of over £40 billion per year.” This triggered a Westminster debate where the Treasury estimated the cost at £50 billion. A fresh petition has since emerged urging a rise to £20,000. The previous petition was among the most supported in parliamentary history, reflecting strong public sentiment on the issue.
