Support is soaring for push which could see MP showdown but short deadline
In last month’s Budget John Healey made no adjustment to frozen tax thresholds (Image: Getty)
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.
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.
Increasing the allowance by just £100 would cost the Treasury around £1bn annually. View and back the petition here.