Burnham pulls back on suggestion to increase tax-free personal allowance
Summary
Andy Burnham, the Prime Minister of the UK, said he is not currently planning to raise the tax-free personal allowance, which has been frozen at £12,570 since 2021. He acknowledges the issue but explained that changes would be costly and difficult, given the country’s financial situation.Key Facts
- The tax-free personal allowance in the UK is £12,570 and has not increased since 2021.
- More people are paying income tax because the threshold has stayed the same while earnings have risen.
- Burnham heard concerns about the personal allowance during recent campaigning but says changes are not part of his initial cost of living plan.
- Increasing the personal allowance could cost the government around £8.5 to £9 billion a year.
- Burnham’s government has promised not to raise income tax rates in the 2024 manifesto.
- A new VAT cut on household electricity bills will start on 1 October, saving households about £45 a year.
- The cost of this electricity bill VAT cut will be partly covered by scrapping a digital ID program, though some disagreement exists on funding details.
- Additional measures to help with cost of living, like lowering bus fares outside London, are expected soon.
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