The government has been compelled to address a petition calling for an increase in the personal tax-free allowance to £18,000, as the petition continues to attract widespread support.
Petition Background
The petition, which has garnered over 31,000 signatures, argues that the personal tax allowance has been frozen at £12,570 since 2021. This freeze was originally set to expire this year, but the Chancellor of the Exchequer extended it until 2031. The petition states: '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.'
Government Response
HM Treasury responded on May 5, emphasizing its commitment to keeping taxes low for working people while investing in public services. The response noted that the previous government froze income tax thresholds from 2021/22 to 2027/28, meaning the personal allowance was not due to rise until April 2028. At Budget 2025, the current government extended these thresholds for an additional three years to the end of the decade.
The Treasury stated: '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.'
Impact on Public Services
Raising the allowance to £18,000 would reduce tax receipts substantially, decreasing funds for hospitals, schools, and other essential services. A £40 billion cut is equivalent to slashing roughly a fifth of the NHS budget in England or about two-thirds of defence spending. The government emphasized that the income tax system is highly progressive, with an internationally high personal allowance.
Support for Low-Income Workers
To support the lowest-paid workers, the government has asked the Low Pay Commission to consider the cost of living when recommending minimum wage rates. Additionally, families are supported through 15 hours of government-funded childcare for all parents of 3- and 4-year-olds, with eligible working parents of children aged 9 months and above accessing 30 hours of free childcare weekly.
Cost of Living Measures
At Budget 2025, the government announced measures to ease cost of living pressures, including cutting energy bills, freezing rail fares, and freezing NHS prescription fees. The government keeps all taxes under review as part of the policy-making process.
