City of Westminster (Parliament Politics Magazine) – MPs debated a petition to raise the income tax threshold from £12,570 to £20,000 at Westminster Hall, but the proposal was not adopted despite public support.
As reported by Newham Recorder, pensioner Alan David Frost initiated the motion, which MPs passionately defended and criticized during a debate in Westminster Hall tonight:
“Raise the income tax personal allowance from £12570 to £20000.
We believe that this would enable pensioners to receive a respectable wage and assist low-income earners in getting off benefits.
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.”
Locals can still add signatures here.
Lewis Atkinson is the Labour MP for Sunderland Central, introduced the petition, saying:
“The reality is that average disposable incomes after tax fell from 2019-20 to 2023-24 an unprecedented and shocking situation in which people were left poorer at the end of the last Parliament than they were at the start of it.”
He added that he believes, is key context for today’s debate, which has been triggered as a result of more than 250,000 citizens signing this petition about income tax personal allowances, for which he also speaks to the wider and entirely understandable public frustration about living standard.
He added:
“In preparation for today’s debate, I had the pleasure to talk with Mr. Alan Frost, who is in the gallery with us today, the creator of this petition.”
Mr. Frost explained to him that he’s recently retired, having worked his whole life, and he feels a sense of injustice that his state pension is considered as income for tax purposes, and that the tax threshold he faces is not increasing.
In the debate, which lasted almost an hour, Liberal Democrat Tom Morrison said,
“I believe that increasing the personal increase allowance could ease the burden that many are facing.”
Daisy Cooper, a fellow Liberal Democrat MP, described the volume of signatures on this petition as a “cry for help”.
Conservative MP James Wild gave a: “spoiler alert (as) I think they are going to be disappointed because we have all seen the government’s response where it says there are no such plans.”
James Murray, the Treasury’s Exchequer Secretary, ended the discussion by explaining that, in the current environment, it is not feasible to alter the personal allowance owing to fiscal discipline.
He estimated it would cost £50bn to make the change, saying:
“I recognize the substantial support for this petition, hard working people and pensioners who have worked hard all their lives want taxes to be as low as possible, and I understand that.”
He added that however, as they have set out today, they have inherited a mess from the previous government, and they have had to take tough choices to set us on a path to generating economic growth.
Raising the personal allowance to £20,000 would undermine the work the chancellor has done to restore fiscal responsibility and economic stability, and it would slash the funding available for vital public services.
This government remains committed to keeping people’s taxes as low as possible.
The amount of income that is exempt from taxes is known as the Personal Allowance, and it is £12,570 on average.
If your income exceeds £100,000, it falls. You forfeit £1 of your tax-free Personal Allowance for every £2 you make beyond £100,000 in earnings.
Since 2021, this sum has been frozen.
More people will move into higher tax rates since the previous Conservative Government froze the threshold until April 2028 rather than letting it increase in line with inflation and salary growth.
If your income is less than the usual Personal Allowance, you and your spouse or civil partnership partner may be eligible to claim the Marriage Allowance to lower your partner’s tax.
What are the main arguments against raising income tax personal allowance to £20,000 in Westminster?
Increasing the personal allowance, according to supporters, would help many low-income individuals move off benefits and enhance their disposable income by removing them from paying income tax. Additionally, it would help retirees by giving them more income by exempting a larger portion of their state pension from taxes.
It is said that increasing the amount of money in the hands of low-income individuals would stimulate the economy.
People on low incomes might be more motivated to work longer hours if their personal allowance was increased since they would keep a larger portion of their earnings. This is significant because some low-income households experience high effective tax and benefit withdrawal rates.
The government points out that it would cost billions of pounds per year to increase the personal allowance to £20,000.