Overview
- The Treasury, which issued a formal response Tuesday after a petition passed 10,000 signatures, said it has no plans to raise the Personal Allowance to £18,000 and estimated the change would cost over £40 billion a year.
- For 2026–27, the Personal Allowance, which is the tax-free amount you can earn, reset at £12,570 and the freeze now runs to 2031 following the 2025 Budget.
- HMRC data show fiscal drag is biting, with higher-rate taxpayers up by 654,000 to 5.76 million and additional-rate taxpayers up by 324,000 to 893,000.
- Households can legally boost tax-free income to £20,070 by using the Rent a Room Scheme, which lets you earn up to £7,500 from a furnished room in your main home before income tax.
- The OBR forecasts frozen thresholds will raise tens of billions by 2030–31, while think-tank analysis warns lower earners and some pensioners will face higher tax bills as pay and the State Pension rise.