Politicians are set to reconsider how much cash Brits are taxed on in an upcoming debate after more than 240,000 people have called for change. Parliament will debate personal tax allowance next month.
A petition signed by 241,657 at the time of reporting has called for personal tax allowance to be raised from £12,570 to £20,000. This would mean you are able to earn £20,000 before being taxed.
Currently, in the UK you can earn £12,570 a year untaxed. Once you earn more than this, any money you make over £12,570 is taxed 20%.
The tax rate then goes up to 40% when you earn £50,271, and 45% when you earn more than £125,140.
Taxable income includes most job-related income, profits from trading, income from renting out property, and most pension income.
Petitioners said the change would help low earners to “get off benefits” and allow pensioners a “decent income”. They explained: “We think it is abhorrent to tax pensioners on their State Pension when it is over the personal allowance.
“We also think raising the personal allowance would lift many low earners out of benefits and inject more cash into the economy creating growth.”
Once a petition hits 10,000 signatures, the Government has to issue a written response. And when it hits 100,000, it must be debated by Parliament.
In its response, HM Treasury said it had “no plans” to increase the personal allowance. It said: “The Government is committed to keeping taxes for working people as low as possible while ensuring fiscal responsibility.
“The Government is committed to keeping taxes for working people as low as possible while ensuring fiscal responsibility and so, at our first Budget, we decided not to extend the freeze on personal tax thresholds. The Government has no plans to increase the Personal Allowance to £20,000.
“Increasing the Personal Allowance to £20,000 would come at a significant fiscal cost of many billions of pounds per annum. This would reduce tax receipts substantially, decreasing funds available for the UK’s hospitals, schools, and other essential public services that we all rely on.
“It would also undermine the work the Chancellor has done to restore fiscal responsibility and economic stability, which are critical to getting our economy growing and keeping taxes, inflation, and mortgages as low as possible.”
It added: “The Government keeps all taxes under review as part of the policy-making process. The Chancellor will announce any changes to the tax system at fiscal events in the usual way.”
Parliament will debate this petition on May 12. You will be able to watch it online at youtube.com/UKParliament.