The UK Government has responded to a growing petition calling for the personal tax allowance to be raised to £18,000, stating there are no plans to make such an increase. The petition, which has gained over 20,000 signatures, highlighted concerns over fiscal drag and its impact on low earners.
Petition Calls for Higher Personal Allowance
Started by Mike Haynes, the petition argues that the personal tax allowance, currently frozen at £12,570, should be raised to £18,000 to allow workers, especially those earning minimum wage, to keep more of their income. The petition states that many low earners may soon find themselves paying tax due to fiscal drag, a situation where wages increase but tax thresholds remain frozen.
Mike Haynes emphasized the growing sense of inequality, noting that higher earners often pay little to no tax due to tax avoidance schemes, while lower earners struggle with rising costs and an increasing tax burden.
Government’s Response to the Petition
In its official response, the UK Government clarified that there are currently no plans to increase the personal allowance to £18,000, citing the £40 billion annual cost of such a move. The government explained that maintaining the current tax threshold was crucial for funding public services, including the NHS and education.
The response from the government read: “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,” reports Heraldscotland.
The government pointed out that the personal tax allowance is currently frozen until at least April 2028, as part of a broader fiscal strategy designed to keep taxes low while continuing to invest in essential services. However, raising the allowance to £18,000 would disproportionately benefit higher earners, according to the government’s assessment.
What is the Personal Tax Allowance?
The personal tax allowance is the amount of income you can earn before you start paying income tax. Currently set at £12,570, this amount reduces for individuals earning more than £100,000. For every £2 you earn above £100,000, you lose £1 of your personal allowance. This structure, along with the frozen thresholds, means that many people are seeing a rise in their tax burden without a corresponding increase in income.
The government maintains that keeping the personal tax allowance frozen is a necessary measure to protect essential services, with the freeze extending to April 2028 as part of the current fiscal policy.
What This Means for Taxpayers
Although the government has dismissed the call for a larger personal allowance, many low and middle-income taxpayers will likely continue to feel the squeeze as inflation, rising costs, and the freeze on tax allowances persist.
While the petition has gained momentum among those advocating for more equitable taxation, the response highlights the ongoing challenge of balancing tax policy with the financial needs of public services.
