Tens of thousands of people have backed a petition
Chancellor John Healey will deliver his first Budget next month (Image: Anadolu, Anadolu via Getty Images)
A petition that is calling for the personal tax allowance to be raised has eight days to run to determine whether it will be debated in Parliament or not. Mike Haynes set up the petition, entitled ‘Raise the personal tax allowance to £18,000’, earlier this year.
The allowance, which sets how much workers can earn in the UK before they pay any tax, has been set at £12,570 since 2021. It is currently frozen until April 2031.
That has created what is known as fiscal drag, as more people are pulled into paying tax to HMRC, or paying a higher rate of tax, as wages increase but the tax allowance stays the same. Some criticise it as a stealth tax, as it increases government tax revenue without the need to announce unpopular hikes.
The petition has been set up on the Parliament petitions website. As of Tuesday morning, it had just shy of 73,000 signatures. It passed 10,000 signatures earlier this year, at which point HM Treasury was obliged to respond. If it gets 100,000 signatures by the closing date of September 30, 2026, it will be considered for debate in Parliament.
The petition reads: “Since 2021 personal tax allowance has been frozen at £12,570. This freeze was due to expire this year, but the Chancellor of the Exchequer has extended it to 2031. We want to keep some more of our own money.
Wages have increased, but the allowance hasn’t (Image: imageBROKER/GRAZVYDAS JANUSKA via Getty Images)
“If you are earning minimum wage then you may soon be paying tax because of fiscal drag. Some higher earners pay little or no tax due to clever use of accounting rules. We think this is so wrong.”
‘It’s so wrong’
Mike told the Express: “I set it up because people are looking at a pay freeze of 10 years while MPs lap it up. So, if lifted in 2031, our buying powers have been reduced by 35% and that’s just down to inflation – forget about price increases, which probably means we’re closer to 50%. How much money has the Chancellor received due to extortionate petrol and diesel prices?
“Then there’s VAT added to fuel duty – it’s so wrong. I thought VAT wasn’t applied to the necessities of life, but it is. How come it’s added to gas and electricity bills? Had thresholds not been frozen, they would now be in the region of £16,400.”
There has, of course, been a change at the top since the petition was set up, with Andy Burnham now Prime Minister and John Healey his Chancellor, replacing Sir Keir Starmer and Rachel Reeves respectively. Mr Healey is set to deliver his first Budget on Wednesday, October 28, and it remains to be seen whether he will spring a surprise and revise the current plan to keep the threshold frozen until 2031.
Mr Haynes’ petition is not the only one to call for a raise and some prominent figures have argued for it to be changed as well. On Monday, Ecotricity owner Dale Vince argued that raising the personal allowance by £3,000 could generate a 1.2% boost to GDP. Mr Vince argued the measure could be financed by the Bank of England ceasing interest payments to commercial banks on their reserves.
Government response
Responding in May, after Mr Haynes’ petition passed 10,000 signatures, HM Treasury said: “The Government is committed to keeping taxes for working people as low as possible while investing in public services and not taking risks with the economy. The previous government froze the main income tax thresholds from 2021/22 until 2027/28 – this means the Personal Tax allowance was not due to rise until April 2028 at the earliest.
“To ensure that the Government can deliver on the public’s priorities, at Budget 2025 it was announced that the personal tax thresholds, including the Personal Allowance, would be maintained at their current levels for a further three years to the end of this decade. The Government currently has no plans to increase the Personal Allowance to £18,000. Increasing the Personal Allowance to £18,000 would come at a significant fiscal cost of over £40 billion per year. This would also benefit higher earners more than basic-rate taxpayers on average.
“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 that we all rely on. A £40 billion cut in public services is equivalent to slashing roughly a fifth of the NHS Budget in England, or around two thirds of defence spending.
“The income tax system is highly progressive, with different rates of tax sitting above an internationally high Personal Allowance. The Government is making these fair and necessary choices on tax so it can deliver on the public’s priorities. Alongside this, the Government is keeping the contribution as low as possible by pursuing a programme of reform to fix longstanding issues in the tax system.
“To support the lowest paid workers in our economy, the Government has asked the Low Pay Commission to account for the cost of living when making each of their recommendations on the minimum wage rates that have applied since April 2025. The government is also supporting families through the universal offer of 15 hours of government-funded childcare for all parents of 3- and 4-year-olds and eligible working parents of children aged 9 months and above can access 30 hours a week in free childcare.
“At Budget 2025, the Government also announced a package of measures that will bear down on prices and help ease cost of living pressures for working people, targeting everyday expenses. This includes cutting energy bills and freezing rail fares and NHS prescription fees. The Government keeps all taxes under review as part of the policy making process.”