In a major decision that has sparked debate across the UK, the government has dismissed a widely supported petition calling for an increase in the personal income tax allowance from £12,570 to £20,000. The proposal, backed by over 250,000 signatories—many of them pensioners—was presented in Parliament as a measure to ease financial pressures on low-income earners and retirees.
Initiated by Alan Frost, a pensioner from Somerset, the petition was described by lawmakers as a “cry for help.” Despite widespread sympathy expressed by MPs from across the political spectrum, the Treasury deemed the proposal too costly, estimating an annual impact of £40–90 billion on public finances.
Speaking in Westminster Hall, Labour’s Exchequer Secretary to the Treasury, James Murray, stressed the need for fiscal responsibility. He stated that such a dramatic tax change would either risk cutting vital services like defence or the NHS, or plunge the country into financial instability. “No responsible government could raise the tax threshold to £20,000 at a cost of £50 billion,” Murray said.
The current personal allowance has been frozen since the 2021 Budget under former Chancellor Rishi Sunak. Although originally intended to end in 2026, the freeze was extended to 2028—and retained by Chancellor Rachel Reeves in her own Budget. This long-term freeze has led to a phenomenon known as fiscal drag, where more individuals are quietly drawn into higher tax brackets without a formal rate increase.
According to the Office for Budget Responsibility, an additional 1.3 million people will enter the tax net by the 2025-26 tax year, with another one million falling into the 40% tax band. Experts at the Institute for Fiscal Studies warn that the freeze effectively acts as a “stealth tax,” especially burdening middle-income earners and pensioners.
While Reform UK supports the £20,000 threshold as part of its tax reform strategy, none of the party’s MPs attended the debate. Their leader, Nigel Farage, has backed the change, arguing it would reduce benefit dependency and put more money into families’ pockets.
Despite this growing public sentiment, the official government response remains firm. A Treasury spokesperson confirmed there are no current plans to revise the personal allowance threshold, citing concerns over funding for hospitals, schools, and economic stability.
The debate, led by MP Lewis Atkinson on behalf of Mr. Frost, captured the growing frustration among working citizens and pensioners caught in rising tax bands due to the stagnant threshold.
At Danchima Media, we will continue monitoring the fiscal policies shaping everyday life for UK residents—especially how these decisions impact low-income households, pensioners, and working families.
