Nearly 10,000 people have signed an online petition calling for the Personal Allowance to be increased from £12,570 to “a more realistic figure” of £45,000. Denver Johnson, who initiated the petition, argues 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”.
The ‘Raise the standard tax-free Personal Allowance to £45,000’ campaign on the petitions-parliament website is nearing the 10,000-signature mark required to elicit a formal response from the UK Government. The petition asserts: “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.”
Once a petition garners over 10,000 signatures, the government must respond, and with the current count approaching this threshold, an official reply is anticipated.
If the petition reaches 100,000 signatures, it may trigger a debate in Parliament, as reported by the Record. The Office for Budget Responsibility has released figures suggesting that maintaining the freezes on 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 commented on the impact of frozen tax thresholds, saying: “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.”, reports Lancs Live.
He further elaborated, “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.”
During the Rachel Reeves budget earlier this year, it was confirmed by the chancellor that National Insurance thresholds across the UK and Income Tax thresholds in England, Wales, and Northern Ireland would be kept on hold until April 2028, echoing the stance of the previous Conservative Government from last year. Meanwhile, there had been rumours that the new Labour Government might push this ‘freeze’ even beyond, possibly until 2030.
By maintaining the present rates, or the so-called “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 “, workers could find themselves inadvertently paying more taxes due to the phenomenon economists refer to as “fiscal drag”.