Andy Burnham hints at tax-free Personal Allowance change | Personal Finance | Finance

A change to the much maligned income tax Personal Allowance threshold could be among the money issues new Prime Minister Andy Burnham makes it a priority to tackle in a bid to help state pensioners, say financial experts.

Analysts also want the new PM, should he take the keys to Number 10, to continue the current administration’s work on growing investing as well as provide ‘clarity’ on new pension rules, while some fear higher wealth taxes are on the cards.

The threshold for Income Tax, currently set at £12,570, has been frozen since 2021 and will remain unchanged until 2031 under plans set out by Chancellor Rachel Reeves in the last Budget.

However, former Greater Manchester Mayor Andy Burnham is now the front runner to replace Sir Keir Starmer as Labour Party leader following Sir Keir’s resignation, and by extension, to become the new Prime Minister.

And according to financial experts, the frozen tax-free Personal Allowance could be one of the first fiscal changes plotted by the ex-Mayor should he enter 10 Downing Street as expected.

Sarah Coles, head of personal finance at AJ Bell, said: “Some suggestions of possible tax cuts have emerged in recent weeks. He hinted that he wants to revisit the income tax personal allowance. This is set to be frozen until April 2031, and while he hasn’t promised that as prime minister he would raise it, he does want to consider it. He is particularly concerned about its impact on pensioners.”

Ms Coles added that the Inheritance Tax change on farmers, already watered down since its first announcement by Rachel Reeves, could also be looked at again.

She added: “He said the inheritance tax changes for farmers should be reconsidered too. He has also suggested business rates for pubs should be cut by 20%, and the threshold lifted for small businesses. While he didn’t commit to reversing the rise in employers’ National Insurance, he said he is sympathetic to the idea.

“Meanwhile, Burnham has also shown enthusiasm for taxing wealth more heavily. He has mentioned land as being undertaxed and has spoken about reforming council tax and stamp duty, which he says is regressive. He has previously suggested reintroducing the 50p rate of tax but declined to say whether that would be on the table if he became PM.

“Before this campaign he had previously suggested inheritance tax ought to be scrapped and replaced with a ‘care levy’ to fund a more joined up national health service and social care system. During the campaign he confirmed he wouldn’t be afraid to consider the idea again.”

Ms Coles stressed that Andy Burnham has pledged to keep the state pension triple lock, the mechanism by which pensioners get automatic state pension increases each year.

Anna Macdonald, Investment Strategy Director, Hargreaves Lansdown, urged that ‘building on investment culture’ is critical for the UK.

Current Chancellor Rachel Reeves already made changes to Cash ISA rules for under-65s in a bid to force more savers to use stocks and shares ISAs rather than hold cash.

Now the investment platform wants Mr Burnham to put this at the forefront of any money policy too, should he take office.

She told the Express: “From an investor’s perspective, the biggest difference between a good and bad outcome is policy, not personality. Whatever the next government looks like, policymakers need to keep building an investment culture and make it easier, not harder, for people to put their money to work.

“We’ve seen real progress in getting people investing investing higher up the policy agenda, and that momentum needs to continue to build a stronger retail investment culture in the UK.

“That means providing expected clarity on the Pension Schemes Act to encourage innovation and deliver value for money for consumers, while also supporting efforts to get more people investing and building greater financial resilience.”