Burnham considers raising tax-free threshold
New Prime Minister Andy Burnham is reportedly examining plans to increase the personal allowance – the amount a person can earn before paying income tax – to provide financial relief for low-income households earning over £12,570. The threshold has been frozen since 2021, pulling more low earners into tax as wages rise.
While no new figure has been confirmed, suggestions indicate the allowance could be lifted as high as £18,000. Such a move would give breathing space to families and pensioners on modest incomes, particularly those with small private pensions that currently push them over the tax-free limit.
Impact on pensioners and low earners
Raising the threshold would benefit low-income pensioners who currently require only a small private pension to exceed the £12,570 limit. Since 2021, frozen thresholds have dragged increasing numbers of low earners into paying tax each year as their incomes grow.
Burnham has also refused to rule out reintroducing the 50p top rate of tax. He stated that further details on tax policy would be revealed at the upcoming Budget.
Burnham's comments on the issue
Speaking to reporters, Burnham said: "All of this will be looked at though at the Budget, and obviously it's difficult given the financial circumstances in which we find ourselves. But I wanted to recognise the point because it's challenging for people and it's people on the lowest incomes perhaps who've most been affected by that."
He added: "So it's an issue that I'm just kind of showing I have a visibility of the issue and the impact it's had on the different groups that I've mentioned, but it's difficult because changing the threshold is not without significant consequences. But I'm looking at it."
Budget to provide clarity
The Prime Minister emphasised that any changes to the personal allowance would be considered alongside the nation's financial constraints. The Budget is expected to outline the government's tax strategy, including potential adjustments to thresholds and rates.
