HM Revenue and Customs (HMRC) has issued a definitive statement rejecting widespread calls to significantly increase the income tax Personal Allowance. The move comes in response to a public petition which has gathered tens of thousands of signatures.
Petition Calls for Major Tax Relief
A petition hosted on the official UK Parliament website has called on HM Treasury and the Labour government to raise the Personal Allowance from its current level of £12,570 to £20,000. The appeal argues that such a change is urgently needed to help households cope with soaring living expenses.
The petition's creators state: "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!"
They further contend that current tax levels are "ridiculous" and that the minimum wage is insufficient to support an average family. The petition suggests the reform would boost employment by making work more financially viable. To date, the petition has been backed by 39,510 signatures. It requires 100,000 signatures to be considered for a debate in Parliament.
Government Cites "Significant Fiscal Cost"
In a firm response, HM Treasury has dismissed the proposal. A government spokesperson stated: "The Government is committed to keeping taxes for working people as low as possible while ensuring fiscal responsibility, so we will not increase the Personal Allowance to £20,000."
The Treasury highlighted the enormous financial implications, estimating that such an increase would come at a significant fiscal cost of more than £50 billion per annum.
"This would reduce tax receipts substantially, decreasing funds available for the UK’s hospitals, schools, and other essential public services that we all rely on," the statement explained. It provided a stark comparison, noting that a £50 billion cut is equivalent to roughly a quarter of the NHS Budget or around 80% of defence spending.
Existing Support Measures Highlighted
Instead of altering the Personal Allowance, the government pointed to existing policies aimed at supporting low-income workers and families. For the first time, the Low Pay Commission has been asked to account for the cost of living when recommending minimum wage rates for April 2025.
Furthermore, the statement emphasised support through childcare, referencing the universal offer of 15 hours of government-funded childcare for parents of 3- and 4-year-olds. Eligible working parents of children aged nine months and above can access 30 hours per week.
The Treasury concluded that all taxes remain under review as part of normal policy processes, with any future changes to be announced by the Chancellor at the next Budget, scheduled for 26th November.
