A growing number of pensioners and low-income earners in the UK are urging the government to increase the personal tax allowance from £12,570 to £20,000.
They argue that this adjustment would provide much-needed financial relief and help reduce dependence on government benefits.
An online petition advocating for this increase has already gained over 12,000 signatures, compelling the government to provide an official response.
The Treasury is expected to address the demand soon amid rising concerns over taxation on pensioners.
Personal Allowance Freeze Sparks Controversy
The government has frozen the personal tax allowance at £12,570 until at least the 2028/29 tax year. As a result, a greater number of pensioners will find themselves liable for income tax, particularly as State Pension payments continue to rise.
For the 2024/25 tax year, the full New State Pension is set at £11,502, with an increase to £11,973 in 2025/26. This leaves only a small gap before retirees surpass the taxable income threshold.
Although pensioners who solely rely on the State Pension will remain untaxed, those receiving workplace pensions or part-time income are increasingly being drawn into the tax system.
Currently, 62% of the UK’s 12.9 million pensioners are already paying tax, and this figure is projected to grow as the personal allowance remains stagnant.
Petition Calls for Fairer Tax Policies
The petition was launched by Alan David Frost, who insists that pensioners should not be taxed on their State Pension.
He argues that increasing the tax-free allowance would enable low earners to be less dependent on government aid while also stimulating the economy.
If the petition garners 100,000 signatures, it will be considered for a Parliamentary debate.
Government Response and Political Debate
Last month, Liberal Democrat MP Ben Maguire urged Chancellor Rachel Reeves to evaluate the feasibility of raising the tax-free allowance for pensioners to £15,000. However, the government has yet to signal any intent to revise the threshold.
In response, Treasury Minister James Murray MP stated that while the government aims to keep taxes low for pensioners, it must also maintain fiscal stability.
How Pensioners Are Taxed in the UK
Pensioners in England and Wales are subject to a 20% tax rate on income exceeding £12,570. In Scotland, a tiered system applies, starting at 19% for income surpassing the threshold.
| Annual Income | Taxable Amount | Tax Rate | Total Tax Owed |
|---|---|---|---|
| £11,500 (State Pension Only) | £0 | 0% | £0 |
| £13,000 (State Pension + Workplace Pension) | £430 | 20% | £86 |
| £15,000 (State Pension + Additional Income) | £2,430 | 20% | £486 |
As the State Pension continues to increase, more retirees will find themselves liable for tax payments, intensifying calls for an increase in the personal allowance.
The Growing Movement for a £20,000 Tax-Free Allowance
With the cost of living on the rise and pensioners facing greater financial strain, the push for a £20,000 tax-free allowance is gaining momentum.
If public support for the petition continues to grow, Parliament may be compelled to debate the matter.
Until then, pensioners await the government’s formal response, hoping for a policy change that will alleviate their financial burden.
The demand for an increased personal tax allowance of £20,000 is gaining widespread support, with thousands of pensioners and low-income earners pushing for tax relief. As more retirees find themselves subject to income tax, the movement continues to grow.
While the government has not committed to revising the personal allowance threshold, mounting pressure and a potential Parliamentary debate could influence future tax policies. Until then, pensioners remain hopeful for a financially fairer system
FAQs
1. Why are pensioners asking for a higher personal allowance?
Pensioners argue that the current personal tax allowance does not account for the rising cost of living and increased State Pension payments. Raising the threshold to £20,000 would help reduce their tax burden and enhance financial security.
2. How many pensioners currently pay income tax?
At present, 62% of the UK’s 12.9 million pensioners are subject to income tax, and this figure is expected to grow as the personal allowance remains frozen until 2028/29.
3. Will pensioners still pay tax if the personal allowance is increased?
If the personal allowance is raised to £20,000, only pensioners earning above this amount from State Pension, workplace pensions, or additional income would be subject to taxation.