People wanting to pressure Chancellor John Healey to increase the lowest frozen tax threshold have just 2 days to take action. A petition on the Parliament website is calling for the lowest tax threshold – presently £12,570 – to be increased to £20,000. Income tax thresholds have been frozen since 2021 and, under current proposals, will remain unchanged until 2031.

The appeal – which only has until Saturday – has now surpassed 30,000 signatures meaning officials are required to provide a formal response – it is yet to do so. Prime Minister Andy Burnham has encountered mounting pressure and rumours surrounding potential alterations to UK income tax thresholds.

The petition, launched by Wade Reid, declares: “The personal allowance has been frozen while living costs have risen, meaning workers pay more tax in real terms. Increasing it to £20,000 would put more money into millions of workers’ pockets, helping with rising bills and supporting low and middle earners.

“The personal allowance has been frozen since 2021 while living costs have risen sharply, meaning workers are paying more tax in real terms. As wages increase slightly to keep up with inflation, more people are pulled into paying tax or higher rates. Increasing the threshold to £20,000 would put more money into millions of workers’ pockets, ease financial pressure, and support low and middle earners during a cost of living crisis.”

If support passes 100,000 signups, it will be considered for a Parliamentary debate where MPs will quiz Treasury ministers who will have to give a response. Fixed at £12,570 since April 2021, the measure has been prolonged until 2031 – and in last month’s Budget Mr Healey made no adjustment to this position- though he hinted to ITV viewers that possible ‘bigger changes’ could be on the horizon.. This freeze has continued to drag more earners into paying income tax or entering higher bands as salaries increase.

Consequently, some of the lowest-earning workers are being compelled to surrender growing amounts in tax, in what is widely known as ‘fiscal drag’. The standard Personal Allowance in the UK sits at £12,570 for the 2026/27 tax year – the sum one can earn each year before incurring 20 per cent income tax.

The higher 40% rate begins at £50,271, while the additional 45% rate commences at £125,140. Independent analysis suggests that a basic-rate taxpayer (£20k-£50k) hands over roughly £700 to £800 more in tax annually purely due to the freeze.

According to the most recent HMRC figures, there are 31.4 million basic-rate taxpayers across the country. This represents a 15% rise in the number of people paying income tax at 20% since tax bands were frozen at 2021 levels.

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Some 7.7 million people are anticipated to pay the higher rate this year — an increase of one million compared to two years ago. A further 1.3 million individuals are projected to pay the 45% additional rate — considerably more than the 263,000 people who paid it in 2010-11 when it was first introduced.

UK Personal Income Tax Allowance: The Push to Increase the Tax-Free Threshold from £12,570 to £20,000

The debate over personal income tax in the United Kingdom has intensified following a petition calling on the Government to increase the annual Personal Income Tax Allowance from £12,570 to £20,000. The proposal has attracted considerable public attention, particularly among low- and middle-income earners who are struggling with the rising cost of living. Supporters argue that increasing the tax-free threshold would give millions of working people more financial freedom, improve living standards and help households cope with growing economic pressures. With a 48-hour deadline approaching for the petition to close, the campaign has once again placed Britain’s taxation system under the spotlight.

The Personal Allowance is the amount of income an individual can earn each tax year before paying income tax. Currently, most people in England, Wales and Northern Ireland can earn up to £12,570 annually without paying income tax. Any income above this threshold is generally subject to taxation, depending on the individual’s income level and applicable tax bands. However, this allowance has remained frozen at £12,570 since April 2021. During this period, households have experienced substantial increases in the cost of essential goods and services, including food, electricity, gas, housing, transport and childcare. Although wages have increased in some sectors, many workers believe that their real purchasing power has not improved sufficiently to compensate for higher living costs.

The campaign to raise the Personal Allowance to £20,000 reflects growing frustration among taxpayers who feel that an increasing proportion of their earnings is being absorbed by taxation and everyday expenses. Supporters argue that the existing threshold no longer reflects the financial realities facing ordinary working families. When the tax-free allowance remains unchanged while wages and prices rise, more people can find themselves paying income tax or moving into higher effective tax burdens. This situation is sometimes described as fiscal drag, whereby taxpayers gradually pay more tax as their nominal incomes increase even when their real purchasing power has not improved significantly.

An increase to £20,000 would represent a substantial change in the British taxation system. Under the proposal, individuals would be able to earn an additional £7,430 annually before becoming liable for income tax. For taxpayers paying the basic rate of 20 per cent, this could potentially reduce their annual income tax bill by as much as £1,486, equivalent to approximately £124 per month. For someone earning £20,000 a year, this could make a meaningful difference to their household budget. The additional money could help pay rent, mortgage instalments, food bills, transport costs and other essential expenses. For families already experiencing financial difficulties, even a relatively modest monthly saving could provide valuable breathing space.

The proposal could also have wider economic benefits. Supporters believe that allowing workers to retain more of their earnings would increase disposable income and encourage consumer spending. When households have more money available, they may spend more in local shops, restaurants, supermarkets and other businesses. This additional demand could support small businesses, stimulate economic activity and potentially contribute to employment growth. Furthermore, reducing the tax burden on lower- and middle-income workers could strengthen the financial incentive to work additional hours or seek better-paid employment.

However, increasing the Personal Allowance to £20,000 would not be without significant challenges. The Government must consider the potential impact on public finances. Income tax represents one of the largest sources of revenue for the Treasury, helping to fund essential public services such as the National Health Service, education, social care, policing, transport infrastructure and welfare support. A substantial increase in the tax-free threshold would reduce the amount of income tax collected unless the Government introduced alternative revenue measures or reduced public expenditure.

The Government has previously indicated that it has no immediate plans to increase the Personal Allowance to £20,000. Its published policy has maintained the £12,570 threshold until April 2031. The Treasury must balance the desire to reduce taxation with the responsibility to maintain stable public finances and ensure that public services receive adequate funding. Critics of the proposal therefore question whether such a significant tax reduction could be introduced without creating additional pressure on government borrowing or requiring higher taxes elsewhere.

Another important consideration is whether increasing the Personal Allowance would benefit everyone equally. Individuals with higher incomes could receive substantial tax savings, while people earning below the existing threshold might receive little or no direct benefit because they already pay no income tax. Similarly, pensioners, unemployed individuals and people receiving certain benefits may not benefit directly from an increase in the allowance. Therefore, some economists and policy analysts argue that targeted financial support, changes to National Insurance contributions or increases in certain benefits could provide more effective assistance to the most financially vulnerable households.

Nevertheless, the petition has highlighted a broader question about fairness within Britain’s taxation system. Many working people believe that employment should provide a reasonable standard of living and that individuals should be allowed to retain a larger proportion of the money they earn. They argue that the tax system should recognise the rising cost of basic necessities and avoid placing excessive pressure on people who are already struggling financially. For these individuals, increasing the Personal Allowance is not simply a political demand but a question of economic fairness and financial security.

The 48-hour deadline associated with the petition has also attracted public attention. However, it is important to understand what this deadline actually means. It relates to the closing period of the parliamentary petition, not a deadline for the Government to introduce the proposed tax change. Once a petition reaches 10,000 signatures, the Government is required to provide a formal response. If it reaches 100,000 signatures, it may be considered for a parliamentary debate, although a debate is not automatically guaranteed. Even if the petition receives substantial public support, the Government is not legally obliged to implement the proposed increase.

The coming days will therefore be important in determining the level of public support for the campaign and the Government’s response to growing concerns about taxation and living costs. The debate may also place pressure on policymakers to reconsider whether freezing tax thresholds for several years remains appropriate in an economy where household expenses continue to change. Any future reform, however, would require careful consideration of its economic consequences, distributional effects and long-term impact on public finances.

Ultimately, the proposal to increase the UK Personal Income Tax Allowance from £12,570 to £20,000 raises important questions about the relationship between taxation, economic growth and living standards. Supporters see it as an opportunity to reward hard-working people, increase disposable incomes and ease the financial pressures facing ordinary households. Opponents and government officials, meanwhile, point to the considerable cost and the importance of maintaining sufficient funding for public services. The challenge for policymakers is to find a balance between allowing people to keep more of their earnings and ensuring that the country can continue to finance essential services. Although the proposed increase has not yet been approved, the campaign has brought an important issue to the forefront of national discussion: how can Britain create a fairer tax system that supports working people while maintaining a sustainable economy?

Had the threshold kept pace with inflation, it would stand at approximately £16,072 next year and £17,380 by 2029-30, according to research by AJ Bell. Should Mr Burnham choose to raise the personal allowance to £16,000, this would come at a cost of roughly £35bn, the investment platform noted.