HMRC will bill one million people unexpectedly, it has been warned, with the number of people liable for income tax set to reach 44.6 million by the end of the decade. That figure is 1.1 million higher than the Office for Budget Responsibility predicted at the time of the Labour Party government's Autumn Budget last year.
Burnham's Stance on Personal Allowance
Andy Burnham has refused to budge on the £12,570 personal tax-free allowance just yet. On the eve of becoming Prime Minister, Mr Burnham had raised the prospect of an increase in the allowance, which has been frozen since 2022. He stressed that the freeze was “the thing I heard the most on the doorsteps” during the Makerfield by-election and that the issue was “lodged in my mind”.
The BBC later reported that any changes to the personal allowance were not part of the new Government’s initial plan to tackle the cost of living. Discussing his u-turn on the personal tax allowance, Mr Burnham later said he had been trying to answer questions “honestly” on tax in his more open style of politics.
Impact on Taxpayers
Data shows the freeze on the personal allowance at £12,570 and the higher-rate threshold at £50,270, extended until April 2031, is the main driver of the rising HMRC bills. About 500,000 extra basic-rate taxpayers are expected this year alone. Those aged 65 and over who are liable for income tax have increased by 630,000 from 9.6 million in 2025-26 to 10.2 million in 2026-27.
Total income tax liability in 2026-27 is expected to be £347 billion, up £43 billion since Labour came to power in 2024-25. Laying out his position on the personal allowance, he added: “There is no commitment at this point to change, but we will look at that at the Budget.”
