Many people in the UK, especially pensioners and low-income earners, have been asking the government to raise the income tax threshold from £12,570 to £20,000. A petition signed by over 2.5 lakh people supported this idea. But during a Parliament debate, ministers said no to the request, saying it would cost too much.
Why People Wanted the Tax Limit Raised
The petition was started by Alan Frost, a pensioner from Somerset. He said this change would help pensioners and people with low incomes keep more of their money. Many MPs described the petition as a “cry for help” from those who are struggling with the rising cost of living.
Supporters believe raising the personal allowance to £20,000 would help people get off government benefits, give pensioners more income, and boost the economy.
What the Government Said
James Murray, Labour’s Exchequer Secretary to the Treasury, made it clear that the government cannot afford to make such a big tax change. He explained that raising the threshold would cost around £50 billion per year. That is about the same amount spent on national defence or a quarter of the NHS budget.
He added that while the government wants to keep taxes low for working people and pensioners, they must also be responsible with the country’s money. Ignoring that responsibility could hurt the economy and damage public services.
What’s Happening with the Current Tax System?
The current tax-free allowance has stayed at £12,570 for a few years now. It was supposed to end in 2026, but the Conservative government extended the freeze to 2028. Labour has also agreed to continue this policy.
Because the tax brackets are frozen, more and more people are getting pushed into higher tax bands. This includes middle-income earners and professionals, who now pay higher taxes even if their salaries haven’t increased much. Experts call this problem a “stealth tax” or “fiscal drag.”
How This Affects People
The Office for Budget Responsibility says that by 2025–26, around 1.3 million more people will start paying income tax, and one million more will be pushed into the higher 40% tax rate. Many people in London and the South East are also crossing into the 45% top tax bracket without knowing it.
This quiet way of increasing taxes is helping the government collect more money, but it’s leaving families with less money in their pockets.
What Reform UK Said
Reform UK, a political party, has supported raising the threshold to £20,000. They believe it would help struggling families and reward hard work. Their leader, Nigel Farage, has promoted the idea, but none of their MPs showed up at the debate.
Government’s Final Response
The government has clearly said that they have no plans to raise the tax threshold. A spokesperson explained that doing so would reduce the money available for important services like schools and hospitals. They believe this move would harm efforts to keep the economy stable and control inflation and interest rates.
While many citizens want the income tax threshold raised to help ease their financial stress, the UK government has rejected the idea. They say it’s just too expensive and could hurt essential services. For now, the threshold stays at £12,570, and more people may continue to move into higher tax bands because of the freeze. This debate shows the growing frustration among taxpayers, especially pensioners and low-income earners, as they feel the burden of rising taxes without clear support.
FAQs
Why did the UK government reject the petition to raise the income tax threshold?
The government said increasing the income tax threshold to £20,000 would cost around £50 billion a year. They believe it would reduce funds for essential services like the NHS and education, and harm economic stability.
What is the current personal income tax allowance in the UK?
As of now, the personal income tax allowance is £12,570. This amount is the same for most taxpayers and has been frozen until 2028.
What does fiscal drag mean in the UK tax system?
Fiscal drag happens when tax bands don’t rise with inflation, so more people end up in higher tax brackets even if their income hasn’t increased much in real terms.
Who supported the petition to raise the threshold?
The petition was started by Alan Frost, a pensioner from Somerset, and was signed by over 250,000 people, including many pensioners and low-income workers.
Has any political party supported the £20,000 tax threshold?
Yes, Reform UK supports raising the threshold to £20,000, saying it would reward work and ease pressure on low-income households.
