The Labour government and HM Revenue & Customs (HMRC) are under growing public pressure to significantly increase the Personal Tax-Free Allowance to £20,000. This proposed change aims to provide immediate financial relief to working families grappling with the soaring cost of living.
What the Petition Demands
Currently, the personal allowance is frozen at £12,570 until April 2028, meaning individuals can earn up to this amount before paying any income tax. A petition submitted to Parliament calls for this threshold to be raised to £20,000. The organisers argue this move is essential to help people cope with rising rents, mortgage payments, council tax, and energy bills.
The petition states: "This would help with increasing rent, mortgages, council tax, and gas and electric bills. Some families can’t afford to go back to work after children due to childcare costs wiping their whole income." It further criticises the current tax burden, claiming the minimum wage is insufficient to support an average family.
Potential Financial Impact for Households
The financial implications of such a policy change would be substantial for basic-rate taxpayers. An individual earning £20,000 or more would see an annual tax saving of £1,486. For a household with two adults both earning at that level, the combined yearly saving would jump to £2,972.
Advocates believe a higher allowance would act as a powerful work incentive. The petition argues it would lead to "a massive increase on people willing to look for work, instead of people not wanting to, due to it being too expensive to now live."
Pathway to Parliamentary Debate
At the time of writing, the campaign has already surpassed a crucial milestone, gathering more than 28,000 signatures. This triggers an official response from the government, as any public petition receiving 10,000 signatures mandates a ministerial reply.
The campaign now eyes the next target: 100,000 signatures. If achieved, the issue of raising the personal allowance will be considered for a full debate in the House of Commons, forcing MPs to publicly address the proposal.
It is important to note the current tax structure:
- The basic rate of 20% applies to income between £12,571 and £50,270.
- The higher rate of 40% is levied on earnings between £50,271 and £125,140.
- An additional rate of 45% applies to income above this level.
The personal allowance is gradually withdrawn for those earning over £100,000, reducing by £1 for every £2 earned above that threshold. It disappears entirely for individuals with an annual income of £125,140 or more.
