A formal petition is calling on HM Revenue & Customs (HMRC) to significantly increase the levels at which Britons start paying income tax. The appeal demands the government raise the personal allowance to £15,597 and the higher-rate threshold to £62,379.02.
The Push to End 'Stealth Tax' Fiscal Drag
The petition, directed at the Labour Party government, argues that the current tax bands are outdated and represent a "stealth tax" on workers. It calculates the proposed new figures using the Bank of England's inflation calculator, comparing them to the levels set in 2021. The basic personal allowance has been frozen at £12,570 since then, while the higher-rate threshold has been static at £50,271.
"We are currently suffering fiscal drag because of this," the petition states. It explains that as the cost of living rises, frozen tax thresholds mean people pay tax on a larger portion of their income, effectively reducing their spending power. The organisers believe increasing the allowances would put more money in people's pockets for bills and reduce reliance on state support, while potentially boosting VAT receipts through increased consumer spending.
How the Tax Petition System Works
For the petition to progress, it must gather substantial public backing. The UK Parliament's petitions system stipulates that at 10,000 signatures, the government is obliged to issue an official response. If the petition reaches 100,000 signatures, it will be considered for a full debate in the House of Commons.
This process gives the public a direct channel to force a discussion on specific policy issues, placing pressure on ministers to address growing concerns about the impact of frozen tax thresholds on household finances.
Understanding Your Personal Allowance
Financial expert Martin Lewis has frequently explained the importance of the personal allowance. "Each of us has a 'personal allowance'. This is the amount we can earn without paying any income tax and is therefore tax-free," he notes.
He clarifies that only income above this allowance is taxed. For example, with the current allowance of £12,570, if you earn £30,000, you only pay the 20% basic rate of tax on £17,430 (£30,000 - £12,570). The petition argues that this tax-free amount has not kept pace with inflation, eroding its real value.
The campaign highlights a growing tension between government fiscal policy and household budgets. With the cost-of-living squeeze continuing, the call to adjust tax bands for inflation is likely to resonate with many taxpayers who feel the pinch of fiscal drag. The government's response, if the petition hits its initial target, will be closely watched as an indicator of its approach to tax policy.
