A petition calling on the UK government to increase the income tax personal allowance from £12,570 to £20,000 has attracted massive public backing. Initiated by Alan David Frost, the proposal has already crossed the 100,000-signature threshold required for Parliamentary debate, with over 248,680 signatures to date. The suggested reform could provide substantial financial relief to pensioners, low-income earners, and working families.
What Is the Personal Allowance?
The Personal Allowance refers to the amount of income a UK taxpayer can earn before becoming liable for income tax. For the 2025/26 tax year, the Personal Allowance remains fixed at £12,570, a level that was frozen in April 2021 and is expected to stay unchanged until April 2028, according to the government’s fiscal policy.
Why Increase the Allowance to £20,000?
Key Arguments Supporting the Rise
| Reason | Explanation |
|---|---|
| Support for Low Earners | Those working on minimum or low wages would keep more of their earnings, improving take-home income. |
| Benefits for Pensioners | As pensions rise with inflation, many retirees are being pulled into the tax bracket. A higher threshold would shield them from tax deductions. |
| Economic Stimulus | With more disposable income, people are likely to spend more, helping boost consumer demand and business revenues. |
| Reduced Benefits Dependency | Higher tax-free income could allow more people to live independently without relying on state support or welfare payments. |
Currently, state pensioners receiving around £11,973 annually (2025/26) are just under the existing Personal Allowance. However, any additional private income or pension can quickly push them into the tax bracket.
How Much Could People Save?
If the Personal Allowance were raised to £20,000, it would drastically cut tax liabilities for many. Below is a table illustrating potential annual savings for basic-rate taxpayers:
| Annual Income | Tax-Free Allowance (Current) | Tax-Free Allowance (Proposed) | Annual Tax Saving |
|---|---|---|---|
| £20,000 | £12,570 | £20,000 | £1,486 |
| £25,000 | £12,570 | £20,000 | £1,486 |
| £30,000 | £12,570 | £20,000 | £1,486 |
These figures are estimates for individuals on the 20% basic tax rate, assuming no other deductions or allowances apply.
What does it mean for Pensioners?
With rising pension amounts, more retirees are finding themselves liable for income tax, especially those born before 6 April 1958, who are now drawing both state pensions and private savings. A £20,000 tax-free threshold would eliminate tax for most pensioners whose income does not exceed that level.
Government’s Position & Petition Status
The petition reached 10,000 signatures on an earlier date, prompting the government to provide an initial response. Once it passed the 100,000 threshold, the House of Commons was obligated to consider the matter for debate, scheduled for May 12, 2025.
The government response, issued on February 20, 2025, reiterated its aim to keep taxes low while ensuring the country’s fiscal balance, but made no commitment to increasing the allowance.
Concerns About Revenue Loss
Critics argue that such a substantial increase in the personal allowance could result in a loss of £40–£50 billion in annual tax revenue. This may necessitate cuts to public services or increased taxes elsewhere, such as VAT or National Insurance (NI).
| Potential Drawbacks | Details |
|---|---|
| Revenue Gap | The Treasury could lose up to £50 billion annually, affecting NHS, education, and welfare programs. |
| Alternative Tax Hikes | To compensate, the government may raise VAT or National Insurance contributions. |
| Inflationary Pressure | More disposable income could increase demand, possibly leading to higher consumer prices. |
Marriage Allowance & Additional Reliefs
UK taxpayers may also benefit from Marriage Allowance or Married Couple’s Allowance, depending on their situation.
| Allowance | Eligibility | Benefit |
|---|---|---|
| Marriage Allowance | One spouse earns less than £12,570 and the other is a basic-rate taxpayer | Transfer £1,260 allowance |
| Married Couple’s Allow. | One partner born before April 6, 1935 | Tax reduction of up to £1,037.50 |
How does the Personal Allowance reduce for High Earners?
The Personal Allowance begins to reduce when income exceeds £100,000, and is completely removed at £125,140 or above. This is due to the tapering rule:
- For every £2 over £100,000, you lose £1 of Personal Allowance.
This system means high earners pay more tax on each pound above the threshold.
Key Official Resources
- Income Tax Personal Allowance – GOV.UK
- State Pension Overview – GOV.UK
- Petition to Raise the Allowance – Parliament Website
- Marriage Allowance Details – GOV.UK
Frequently Asked Questions
Q1. What is the Personal Allowance in the UK for 2025/26?
It is £12,570, the amount you can earn before paying income tax.
Q2. How much tax would I save if the allowance rose to £20,000?
Basic-rate taxpayers could save up to £1,486 annually.
Q3. Will this change help pensioners?
Yes, it would reduce or eliminate income tax for many state pensioners.
Q4. Has the UK government accepted the petition?
It has acknowledged the petition but has not committed to making changes yet.
Looking Ahead
The proposal to raise the Personal Allowance to £20,000 is rooted in the rising cost of living and concerns that tax thresholds have not kept pace with inflation or wage growth. It could provide a significant boost for millions, especially retirees and low-income families, but the financial trade-offs for the government are considerable.
The upcoming Parliamentary debate on May 12 will be critical. If supported, it could represent one of the most impactful tax reforms in recent UK history.
Katherine Johnson is a passionate writer with a keen interest in storytelling, content creation, and creative expression. She enjoys exploring diverse topics and crafting engaging narratives that captivate readers.