Chancellor Rachel Reeves has responded to a petition calling for an increase in the personal tax-free allowance to £18,000, after it surpassed 10,000 signatures. The petition, now backed by 16,000 names, has triggered an official response from HM Treasury under parliamentary rules.
Under the current system, petitions that reach 10,000 signatures require a government response. If the petition reaches 100,000 signatures, it will be debated in Parliament. The petition argues that the personal tax allowance has been frozen at £12,570 since 2021, with the freeze extended to 2031 by the Chancellor.
The petition states: "Since 2021 personal tax allowance has been frozen at £12,570. This freeze was due to expire this year but the Chancellor of the Exchequer has extended it to 2031. We want to keep some more of our own money. If you are earning minimum wage then you may soon be paying tax because of fiscal drag. Some higher earners pay little or no tax due to clever use of accounting rules. We think this is so wrong."
Government Response
In its response, HM Treasury said: "The Government is committed to keeping taxes for working people as low as possible while investing in public services and not taking risks with the economy."
The response continued: "The Government currently has no plans to increase the Personal Allowance to £18,000. Increasing the Personal Allowance to £18,000 would come at a significant fiscal cost of over £40 billion per year. This would also benefit higher earners more than basic-rate taxpayers on average."
The Treasury added: "Raising the Personal Allowance to £18,000 would reduce tax receipts substantially, decreasing funds available for the UK’s hospitals, schools, and other essential public services that we all rely on. A £40 billion cut in public services is equivalent to slashing roughly a fifth of the NHS Budget in England, or around two thirds of defence spending."
Progressive Tax System
The response highlighted that "the income tax system is highly progressive, with different rates of tax sitting above an internationally high Personal Allowance." It concluded: "The Government is making these fair and necessary choices on tax so it can deliver on the public’s priorities."
The Treasury also noted that "the Government keeps all taxes under review as part of the policy making process."
