An online petition has garnered nearly 10,000 signatures, demanding the Personal Allowance be raised from £12,570 to “a more realistic figure” of £45,000. The petition’s creator, Denver Johnson, contends that the current income tax threshold “has been kept unreasonably low for far too long, at the expense of the poorest, most needy people in our society”.
With over 9,700 individuals backing the ‘Raise the standard tax-free Personal Allowance to £45,000’ initiative on the petitions-parliament website, it is close to securing a written response from the UK Government, which is obliged once the petition hits 10,000 signatures. The petition further states: “We feel that the poorer majority should pay substantially less than the wealthy. We think that the tax system seems designed to make the divide between rich and poor increase exponentially.”
Government responds to all petitions that get more than 10,000 signatures and the petition is currently awaiting a reply. At 100,000 signatures, the petition will be considered for debate in Parliament.
Successive governments have frozen the personal tax allowance rates meaning people are sucked in to paying more tax. The Office for Budget Responsibility has published figures estimating freezes to the income tax personal allowance and higher-rate threshold for four years “will bring 1.3 million people into the tax system and create one million higher-rate taxpayers by 2025/26”.
MoneySavingExpert.com founder Martin Lewis has said: “Imagine someone who currently earns £12,000 now. Because earnings do tend to increase each year, in a couple of years’ time they’ll earn £13,000. But because the thresholds are frozen, they will now start to pay 20% tax on some of their earnings.
“And in fact, what freezing the threshold does is that it means no matter what you earn, as your earnings increase, a bigger proportion of your earnings goes on tax. And that’s how the Chancellor makes money from it.”
In the Rachel Reeves budget earlier this year the chancellor confirmed National Insurance thresholds across the UK and Income Tax thresholds in England, Wales and Northern Ireland would remain frozen until April 2028 – which is in line with what the previous Conservative Government said last year. There had been speculation that the new Labour Government would extend this ‘freeze’ further to 2030.
By freezing the tax thresholds, workers can lose out in a process known by economists as “fiscal drag”.