Plans for millions to get tax cut as people pay ‘ridiculous amounts’ | Personal Finance | Finance
A new campaign calling for the personal allowance to be increased to £20,000 is gaining ground. The current personal allowance is set at £12,570, meaning you can earn up to this amount without paying income tax. If the allowance was lifted to this level, a basic rate taxpayer earning £20,000 or above would pay £1,486 a year less income tax.
Reform UK has previously endorsed such an increase. The petition to Parliament has already reached 5,900 signatures at the time of writing. If it reaches 10,000 signatures, the Government will have to issue a response.
The message reads: “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.
“We think that we are currently paying ridiculous amounts of tax, and that minimum wage isn’t even enough to support an average family. We believe that this would lead to a massive increase on people willing to look for work, instead of people not wanting to, due to it being too expensive to now live.”
If the petition can reach 100,000 signatures, the issue will be considered for debate in Parliamant. A previous petition calling for the personal allowance to go up to £20,000 amassed more than 280,000 signatures, prompting a debate in May.
Treasury minister James Murray said during the debate: “I recognise the views of everyone who has put their name to the petition, and let me be clear that, as a Government, we want taxes on working people and on pensioners, who have worked hard all their lives, to be as low as possible.
“We were elected to put more money in people’s pockets and, crucially, we were elected to do so in a fiscally responsible way. That is a critical point to understand.
“We want to keep taxes on working people and pensioners as low as possible, but if we were to follow the calls of some Opposition parties and abandon fiscal responsibility, it would lead to economic chaos and the collapse of public services, and that would harm working people and pensioners the most.”
If you earn more than £100,000, your personal allowance gradually decreases. It reduces by £1 for each £2 you earn above this level, meaning you get zero allowance once your income reaches £125,140 or above.
