A petition urging the Government to raise the personal tax allowance to £18,000 has attracted 82,000 signatures, just 18,000 short of the 100,000 needed to trigger a parliamentary debate. The petition closes on 30 September, giving campaigners three days to mobilise support.
The personal tax threshold has been frozen at £12,570 since 2021. Critics say this has caused 'fiscal drag', meaning more low-paid workers are paying tax as inflation pushes wages higher.
Petition creator's case
The petition, created by Mike Haynes, states: "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.
"If you are earning minimum wage then you may soon be paying tax because of fiscal drag. Some higher earners pay little or no tax due to clever use of accounting rules. We think this is so wrong."
Former Chancellor Rachel Reeves extended the freeze to 2031 last November.
Treasury response
The Treasury has rejected calls to change the basic tax rate of 20% above £12,570. Officials stated: "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.
"Raising the Personal Allowance to £18,000 would reduce tax receipts substantially, decreasing funds available for the UK's hospitals, schools, and other essential public services that we all rely on. A £40 billion cut in public services is equivalent to slashing roughly a fifth of the NHS Budget in England, or around two thirds of defence spending.
"The income tax system is highly progressive, with different rates of tax sitting above an internationally high Personal Allowance.
"The Government is making these fair and necessary choices on tax so it can deliver on the public's priorities. Alongside this, the Government is keeping the contribution as low as possible by pursuing a programme of reform to fix longstanding issues in the tax system."
Impact of the freeze
Writing for the Institute for Fiscal Studies, Isaac Delestre said this month: "Had it been uprated in line with inflation since April 2021, the personal allowance would today stand at £16,070 - £3,500 higher than its actual level. By 2030-31, the gap between the personal allowance and where it would have been had it not been frozen will (under current inflation forecasts) reach £4,870. This represents a 22% real-terms reduction in the value of the personal allowance between 2021-22 and 2026-27, with a further 8% reduction expected by 2030-31."
If the petition reaches 100,000 signatures, it will be considered for parliamentary debate, potentially compelling the Government to outline its stance and contemplate modifications.
