The petition, titled Raise the personal tax allowance to £18,000, was started by Mike Haynes, who said: “Since 2021 personal tax allowance has been frozen at £12,570. We want to keep some more of our own money.
“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.”
Could Personal Allowance increase to £18,000?
Responding to the petition, the Government said there were currently no plans to increase the Personal Allowance.
Doing so, they said, would cost more than £40 billion per year.
Their response 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.”
What is the Personal Tax Allowance?
The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on.
It decreases if your income is over £100,000. For every £2 you earn over £100,000, you lose £1 of your tax-free Personal Allowance.
This amount has been frozen since 2021.
