Financial Boost for State Pensioners: There is a big debate going on in Britain at the moment about income tax. The reason for this is a petition started by Alan David Frost. In this petition, it has been demanded that the UK government should increase the personal allowance on income tax from £12,570 to £20,000. By June 2025, this petition has received the support of more than two lakh people and now it can be placed for debate in the Parliament. This issue has become bigger because it will directly impact the pockets of crores of people in the country.
Personal Allowance is actually the limit on which a person is completely exempt from income tax. At present, this limit remains at £12,570 and it has been frozen from 2021. Due to this freeze, the tax burden on the real income of the people is increasing despite rising inflation and salary increase. This is called Fiscal Drag in financial language. Its effect is that as your salary increases, you start paying more tax, which reduces the savings in hand.
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Why is there a demand to increase it to £20,000?
This petition started by Alan David Frost is getting tremendous support from the people because it is directly related to every person’s pocket. There is a demand to increase the existing Personal Allowance to £20,000 so that common people can get tax relief and they can keep a large part of their hard-earned money with them.
Inflation is constantly increasing, but the tax exemption limit remains the same. In such a situation, despite the increase in salary, people are not feeling as financially empowered as they should. If the exemption limit is increased to £20,000, not only will the low income group people get relief but pensioners and the middle class will also benefit from it. This will leave more money in their pockets, which they can spend and this will also strengthen the country’s economy.
Who will benefit the most from this change?
If Personal Allowance is increased to £20,000, then the biggest benefit will be to those people whose income is limited. For salaried employees, especially those working on minimum wages, this relief will be no less than a boon. Their entire income can be tax free, which will help them meet their basic needs better.
Apart from this, this decision will also be a relief for the elderly who live on pension. At present, many pensioners also pay tax on their State Pension. If the exemption limit is increased, their pension will stop being taxed, so that they will be able to take advantage of their full pension.
Middle class people whose salary is around the tax limit can also save tax of up to £1,486 annually. This amount is not small and it will strengthen their financial position.
Government’s response and further process
The UK government is keeping an eye on this petition. According to the rules, when a petition gets 10,000 signatures, the government has to respond to it. When this figure crosses 100,000, it becomes mandatory to debate it in Parliament. This petition can be signed till June 2025, that is, people can still participate in it.
At present, the government’s stance seems a bit strict because the previous Conservative government has already announced that Personal Allowance will be kept frozen till April 2028. If the government considers increasing this limit, then it will have to bear a tax loss of about £40 to £50 billion annually. In such a situation, the question arises that from where will this loss be compensated.
Experts believe that the government can increase other taxes like VAT or National Insurance to cover this loss. This will again have a direct impact on the general public. Therefore, it will not be easy for the government to take this decision.
What do the current rules of tax allowance say?
There are some special conditions of Personal Allowance in Britain. If your income is more than £100,000, then your tax free allowance of £1 is reduced for every £2 additional income. When your income reaches £125,140, your entire tax free limit ends and you start paying income tax on your entire income.
Apart from this, if you are married and your spouse has less income, then you can transfer an allowance of £1,260 under Marriage Allowance. On the other hand, if you or your partner was born before 6 April 1935, then you can get the benefit of additional tax exemption under Married Couple’s Allowance.
What can be the challenges?
The demand to increase Personal Allowance to £20,000 may be logical and justified, but many challenges are also associated with it. The biggest threat will be on the government’s revenue. The decrease in tax collection can affect NHS, schools and social security schemes.
The second challenge can be that the government increases other taxes to compensate for this loss. In such a situation, the benefit that people will get from increasing Personal Allowance may be lost in inflation or other tax increases. Apart from this, experts are also expressing apprehension that if more money comes in the pockets of the people, then this will increase the demand and inflation can get faster.
Conclusion
The demand to increase Personal Allowance from £12,570 to £20,000 seems completely logical in today’s time. In view of inflation and rising living costs, the government should take positive steps in this direction. This will provide relief to the common man and his financial condition will also improve. However, the government will also face the challenge of how it will compensate for the loss of revenue due to this decision and how it will balance the rest of the essential expenses of the country.
If you want to support this petition, you can sign it before 20 June 2025 and make your voice reach the Parliament.
FAQs On Financial Boost for State Pensioners
Q. What is the UK Personal Allowance?
A. It’s the amount of income you can earn before paying income tax, currently £12,570.
Q. Why is there a petition to increase it to £20,000?
A. To help low earners, pensioners, and boost the economy by increasing disposable income.
Q. How many signatures does the petition have?
A. As of June 2025, over 200,000 people have signed it.
