New UK Government update on calls to increase Personal Allowance to £20,000

More than 252,500 people signed an online petition calling for an increase to the £12,570 Personal Allowance.
Income tax rises for Scots in April - how the changes affect you
The UK Government has rejected proposals in an online petition to increase the Personal Allowance from £12,570 to £20,000. More than 252,500 people from across the UK signed the e-petition that was debated in Westminster Hall earlier this week.
Only a handful of MPs took part in the debate which was observed by petition creator Alan David Frost, who sat in the public gallery. The bottom line from Exchequer Secretary to the Treasury, James Murray, is that it would cost £50 billion to increase the Personal Allowance to £20,000.
‌
He told MPs: '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.'
‌
Mr Murray continued: '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.'
Mr Murray explained: 'Raising the Personal Allowance to £20,000 would cost more than £50 billion. That is more than the £45 billion of unfunded tax cuts announced by Liz Truss in her disastrous mini-Budget. Conservative and Reform MPs may have cheered Liz Truss on, but like the British people, we in the Labour party know the damage that that caused, and we will never let it happen again.
'To put it another way, if £50 billion was taken out of public services, that would be equal to wiping out almost the entire UK defence budget or slashing the NHS by a quarter. The British people will not be the winners if public services collapse or chaos returns to the economy.'
He highlighted how the Labour Government is doing 'everything we can to support working people and pensioners'.
‌
Mr Murray said: 'In our first Budget, we decided not to extend the freeze on personal tax thresholds, meaning that people will be able to keep more of their income. We are supporting hard-working families and pensioners through the plan to make work pay and through our significant increases to the national living and minimum wages and the State Pension.'
He also said that the UK Persona Allowance is 'one of the more generous personal tax allowances in the OECD, and the most generous in the G7'.
The Personal Allowance will be frozen at £12,570 until the 2028/29 financial year.
‌
Online petition
Petition creator Alan David Frost argues it is 'abhorrent to tax pensioners on their State Pension when it is over the personal allowance' threshold and says the increase would 'inject more cash into the economy'.
The 'raise the income tax personal allowance from £12570 to £20000' petition states: 'We think this would help low earners to get off benefits and allow pensioners a decent income.
'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.'
‌
Responding to the proposals in the petition on February 20, the Treasury gave a similar response to Mr Murray. The Department said: "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."
It also went on to say that the UK Government has no plans to increase the Personal Allowance to £20,000.
You can read the full response on the petitions-parliament website here.
‌
State Pension payments 2025/26
Weekly State Pension payments increased on April 7, however, people will not see an immediate increase as the contributory benefit is paid in arrears.
Full New State Pension
‌
Weekly payment: £230.25
Four-weekly payment: £921
Annual amount: £11,973
Full Basic State Pension
Weekly payment: £176.45
Four-weekly payment: £705.80
Annual amount: £9,175
‌
To check your own future State Pension payments, use the online forecasting tool on GOV.UK here.
State Pension and tax
The most important thing to be aware of is that someone on the full New State Pension will not pay income tax, but older people with additional income through employment, private or workplace pensions, might need to pay tax.
For most people, this would be paid automatically through PAYE on employment and tax on private pensions. Anyone who doesn't pay tax automatically pays tax through deductions, would receive a tax bill from HMRC the following summer to be paid by January in the next year.
‌
There has been a fair bit of speculation on the number of pensioners who will pay tax before the Personal Allowance freeze ends, but currently of the 13 million State Pensioners across the UK, some 8.51 (65%) already pay some tax in retirement, so this isn't something new.
And with auto-enrolment in the workplace - now in its 13th year - more people will benefit from increased income in retirement and will probably pay tax - which will typically be deducted from their private pension.
It's important to understand any tax to be paid in retirement is based on the amount of income earned above the threshold - not the total additional income. For example, if someone has a total annual income of £13,000, they will pay tax on £430 - which is the amount above the £12,570 threshold.
Those affected would then have to pay HMRC 19 per cent of their income above the threshold, which is the starter rate of tax in Scotland (20% in England).

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Daily Mirror

19 minutes ago

• Daily Mirror

Labour industrial strategy's £275m boost 'backs young people in whole country'

The long-awaited strategy will include a £275million boost to skills training for the one in seven young people out of work and education - backing British talent instead of importing workers from overseas Labour's long-awaited industrial strategy will prove the Government is 'on the side of working people' across the whole country the Industry minister vows ahead of its publication on Monday. The strategy is intended to boost key sectors of the economy for the next decade, with advanced manufacturing, clean energy and defence among the sectors to see increased focus. ‌ Today, Business Secretary Jonathan Reynolds vowed to 'power the industrial strategy by investing in working people' ‌ He promised a £275million boost to skills training for the one in seven young people out of work and education - backing British talent instead of importing workers from overseas. And writing for the Sunday Mirror Sarah Jones, the Industry Minister said the strategy would not just focus on London and the south east. 'From Belfast to Barrow, Derby to Dundee, our modern Industrial Strategy will build on the world-leading strengths of our nations and regions to turbocharge investment into our communities, raising wages and living standards for working people,' she wrote. 'We're not just putting a sticking plaster over the cracks of the economy. We're setting out a plan to fix the problems that have plagued us for years.' The training cash will fund the creation of new 'Technical Excellence Colleges' to provide cutting-edge courses in defence and engineering. It's been targeted to address the UK's skills gaps which leave businesses struggling to find people with the talents and skills they need. ‌ 'To make Britain the best place in the world to do business, we also need the best workforce in the world with the right skills and expertise to thrive,' Mr Reynolds said. 'Where past governments have watched from the sidelines as British industry has faced under-investment and opportunities have been shipped overseas, this government is leading the way, and our modern Industrial Strategy is a downpayment on a decade of renewal.' The UK's last industrial strategy was in 2017, when the Tories published a four-year plan ending in 2021. We're giving young people a chance to succeed By SARAH JONES, Minister for Industry This government is on the side of working people. And our modern Industrial Strategy, which we will publish tomorrow, will prove that beyond doubt. For the past 14 years, governments have sat on the sidelines watching British industry struggle – no direction, no support and no strategy. ‌ Neglecting our world-class industrial sectors and leaving workers in the lurch, while only worsening the gap between rich and poor and extending the north-south divide. Even before we entered Government we have been listening to industry and knew bold action was needed. Working hand in hand with industry and the workforce we will take the action needed to keep jobs and investment on our shores for decades to come. And the UK means the whole of our country: not just London or the Southeast. ‌ From Belfast to Barrow, Derby to Dundee, our modern Industrial Strategy will build on the world-leading strengths of our nations and regions to turbocharge investment into our communities, raising wages and living standards for working people. We're not just putting a sticking plaster over the cracks of the economy. We're setting out a plan to fix the problems that have plagued us for years. Currently one in seven young people are unemployed or out of education. We're giving them the chance to succeed by creating thousands of new training opportunities and transforming Britain's skills system, with more than £275 million in new investment to help British workers secure good, well-paid jobs in the industries of tomorrow. ‌ This will fund new training, short courses and other education opportunities right across the country in sectors like defence, AI, clean energies and advanced manufacturing. These are sectors where the UK is already world-leading, and which are expected to add £158 billion to our economy by 2035 and create an astounding 1.1 million new, well-paid jobs. Our skills overhaul will also set up new Technical Excellence Colleges across the UK to help train thousands of new skilled workers by 2029, in careers like engineering, programming and IT systems, helping Britain to stay competitive on the global stage. But that's just the tip of the iceberg. Tomorrow, our new Strategy will set out how we'll invest billions in our high-growth sectors in every part of the country: creating thousands of secure, well-paid and high-skilled jobs, backed by employment rights fit for a modern economy. The number one mission of this government's Plan for Change is growth, and putting more money in working people's pockets. And that's exactly what our modern Industrial Strategy will do.

Western Telegraph

20 minutes ago

• Western Telegraph

Windrush campaigners urge the Government to save Notting Hill Carnival

The west London carnival is in jeopardy, its chairman Ian Comfort said in a letter on Wednesday, when he asked Culture Secretary Lisa Nandy to provide urgent funding to save the event. Jacqueline McKenzie, a campaigner and human rights lawyer who helped victims of the Windrush scandal, said the carnival holds 'huge national and international significance'. 'The Government needs to recognise this and act urgently to protect it,' Ms McKenzie said. In the late 1950s, Notting Hill became home to many people from the Caribbean who arrived in Britain on Windrush and accompanying ships, and the carnival was founded by pioneers of that generation. Ms McKenzie said the carnival being at risk 'adds insult to injury' for victims of the Windrush scandal. 'It should not be lost on us that these funding concerns coincide with Windrush Day on Sunday,' she said. 'To see this celebration in jeopardy whilst so many of the Windrush generation continue to fight for justice following the Home Office scandal only adds insult to injury. 'Carnival embodies the fundamental role of Black and Caribbean communities in Britain, and the Government should be upholding the Windrush legacy instead of undermining it.' The carnival attracts around two million people over the August bank holiday, and Susan Hall, leader of the Conservatives on the London Assembly, previously said the event was a 'victim of its own success' and a 'disaster waiting to happen' because of the large number of attendees. City Hall said it has been working with partners to ensure the safety of carnival-goers, which it described as 'paramount'. Professor Patrick Vernon, a cultural historian and Windrush campaigner, said: 'Notting Hill Carnival is far more than a street event — it is a vital cultural institution with both national and international significance. 'As the second-largest carnival in the world, second only to Rio de Janeiro, it underscores London's position as a leading global capital of diversity, creativity and cultural exchange.' Professor Vernon campaigned for a national Windrush Day following the 2018 scandal when it was revealed thousands of British people, mainly of Caribbean origin, were wrongly classed as illegal immigrants – with many deported while others faced difficulty securing work, accessing healthcare or housing. Jacqueline McKenzie said the carnival 'embodies the fundamental role of Black and Caribbean communities in Britain' (PA) 'The injustice faced by the Windrush Generation in recent years makes the threat to Notting Hill Carnival all the more painful,' Professor Vernon said. 'It is a celebration born of resistance, resilience, and unity – a legacy that should be upheld, not undermined. To allow this cornerstone of Black British identity to fall into jeopardy is to further betray the communities who have already given so much. 'As we approach the 70th anniversary of this extraordinary event, we are reminded that Notting Hill Carnival represents the very best of Britain: unity in diversity, creativity in adversity, and joy in community. Now more than ever, these are values worth defending.' Glenda Caesar, director of the Windrush National Organisation, also urged the Government to step in to save the event, adding: 'In the face of historical and ongoing injustices experienced by people of colour, the carnival stands not only as a celebration of resilience, heritage and identity but also as a powerful symbol of unity and inclusion. 'Supporting this event affirms the UK's commitment to embracing diversity, acknowledging its multicultural roots, and fostering a society where all communities feel seen, valued and empowered.' The Department of Culture, Media and Sport has been contacted for comment.

Western Telegraph

20 minutes ago

• Western Telegraph

Starmer puts skills training at heart of industrial strategy plan

The decade-long plan for 'national renewal' will include £275 million in skills investment to train Britons to do jobs in growth industries which might otherwise require imported labour. The strategy will include specific funding to train people for work in defence, engineering, digital and construction roles. Business Secretary Jonathan Reynolds said the strategy 'will help transform our skills system to end the overreliance on foreign labour and ensure British workers can secure good, well-paid jobs in the industries of tomorrow and drive growth and investment right across the country'. Business Secretary Jonathan Reynolds wants the skills plan to reduce reliance on foreign workers (Ben Whitley/PA) Monday's industrial strategy will be followed later in the week by a new trade plan intended to make the UK the best-connected country in the world to do business. The Prime Minister will launch the industrial strategy hoping it will help in his mission of delivering economic growth. The economy shrank by 0.3% in April, the biggest monthly contraction in gross domestic product for a year-and-a-half, as businesses felt the impact of global uncertainty caused by Donald Trump's tariffs and domestic pressure as a result of hikes to firms' national insurance contributions. Around one-in-seven young people are not in education or employment, and the number of people taking an apprenticeship has fallen by almost a fifth between 2016/17 and 2023/24. The Government hopes the growth sectors identified in the industrial strategy will create 1.1 million new jobs by 2035. The skills package includes capital investment from a £200 million fund which will support new facilities including 'technical excellence colleges' providing specialised training for local industries. The total funding is expected to train thousands more workers by 2029 including computer programmers, IT technicians, electrical and civil engineers. Education Secretary Bridget Phillipson said: 'Skills rightly run right through the heart of this industrial strategy because they are key to breaking the link between background and success for young people and delivering prosperity for our country.' Stephen Phipson, the boss of manufacturers' organisation Make UK, welcomed the skills announcement. 'We look forward to working with the Government to fix the skills gap in manufacturing, which has been the sector's Achilles' heel for decades,' he said. Other elements of the plan are expected to include measures to help cut energy costs for industries which have complained they are being forced to compete with rivals overseas who face lower bills. Meanwhile some £380 million will be spent on a range of projects intended to double private investment in the creative industries. Shadow business secretary Andrew Griffith welcomed the investment in skills but said 'the Government are stepping on the accelerator and the brake at the same time' by hiking national insurance for firms and introducing extra employment rights which could increase costs. 'This inherent contradiction cannot make for a feasible or serious strategy, and will hold the Government to account for it,' he said.