Financial Boost for State Pensioners: A petition to Parliament calling for an increase in the income tax personal allowance from £12,570 to £20,000 has gained significant public support. Started by Alan David Frost, the petition argues that this change would help low earners move off benefits and ensure pensioners have a decent income without being taxed unfairly.
With over 133,915 signatures, the petition has surpassed the 100,000 threshold, meaning Parliament will now consider it for debate.
Why Increase the Personal Tax Allowance?
The Personal Allowance is the amount of income you can earn before you start paying income tax. It is currently set at £12,570 and has been frozen since 2021, meaning it does not increase with inflation or wage growth.
Key Arguments for Raising It to £20,000:
- Helps Low Earners – Many people struggling on low wages would pay less tax, increasing their take-home pay.
- Supports Pensioners – Reduces or eliminates tax on State Pensions, ensuring retirees keep more of their money.
- Boosts the Economy – More disposable income could lead to higher consumer spending, stimulating economic growth.
- Reduces Reliance on Benefits – Higher tax-free earnings may allow more people to become financially independent.
However, critics argue that this change could cost the UK Treasury billions in lost tax revenue, potentially leading to spending cuts or tax increases elsewhere.
Government Response & Next Steps
What Happens Next?
- At 10,000 signatures, the government was required to respond to the petition.
- At 100,000 signatures, Parliament must consider holding a debate on the issue.
- The petition remains open, meaning more people can still sign it to show support.
Government’s Position
The previous Conservative government froze the personal allowance until April 2028, instead of allowing it to rise with inflation and wages. This has resulted in more workers moving into higher tax brackets over time.
If the government decides to raise the threshold, it would need to find alternative sources of revenue to offset the loss of tax income.
Understanding the UK Personal Tax Allowance
The standard Personal Allowance is £12,570, meaning you don’t pay income tax on earnings below this amount.
How It Works:
- If you earn over £100,000, your personal allowance decreases.
- For every £2 earned over £100,000, you lose £1 of your tax-free allowance.
- This means those earning £125,140 or more lose the entire personal allowance.
Marriage & Married Couple’s Allowance
- If you’re married or in a civil partnership, you may qualify for Marriage Allowance, which lets a lower-earning partner transfer up to £1,260 of their allowance to their spouse.
- If you or your partner were born before 6 April 1935, you may be eligible for Married Couple’s Allowance, which can reduce tax further.
Potential Impact of Raising the Allowance to £20,000
Who Benefits?
- Low earners – More people would pay zero income tax on their wages.
- Pensioners – Many would no longer pay tax on their State Pension.
- Middle-class workers – Would save up to £1,486 per year in tax.
Challenges & Concerns
- Loss of Tax Revenue – Estimated at £40-50 billion per year, affecting public services like the NHS, education, and welfare.
- Possible VAT or NI Increases – The government may raise other taxes to compensate.
- Inflation Risk – More disposable income could lead to higher consumer prices.
The petition to raise the UK income tax personal allowance to £20,000 has gained widespread support, passing 133,915 signatures and triggering consideration for a debate in Parliament.
While this change could significantly ease financial pressure for low earners and pensioners, it also raises concerns about government revenue loss and potential funding gaps for public services.
The final decision now rests with MPs, who must weigh the economic benefits against the cost of implementation. If successful, this change could mark one of the most significant tax reforms in recent years.
Would you support raising the tax-free personal allowance to £20,000? Let us know in the comments!
FAQ
What is the UK Personal Allowance?
The Personal Allowance is the amount of income you can earn before paying tax. It is currently set at £12,570.
Why is there a petition to raise the personal allowance to £20,000?
Supporters believe raising the Personal Allowance would help low earners, reduce tax on pensions, and boost the economy by increasing disposable income.
How many people have signed the petition so far?
As of now, over 133,915 people have signed the petition, meaning Parliament will consider it for debate.
How much tax would I save if the allowance increased to £20,000?
If the Personal Allowance rose to £20,000, basic-rate taxpayers could save up to £1,486 per year in tax.
Will pensioners benefit from this tax change?
Yes, pensioners would benefit as a higher Personal Allowance would reduce or eliminate tax on their State Pension.
What happens next with the petition?
Since it has surpassed 100,000 signatures, Parliament will now consider debating it. The government may respond with their stance on the proposal.
Has the UK government responded to the petition?
The government has acknowledged the petition but has not yet committed to increasing the Personal Allowance. The discussion will depend on economic factors and budget constraints.
How can I sign the petition?
You can sign the petition on the official UK Parliament petitions website while it remains open.