Nearly 218,000 people have signed an online petition in support of an increase to the £12,570 tax threshold.
Income tax rises for Scots in April – how the changes affect you
An online petition calling for the personal tax allowance to rise from £12,570 to £20,000 to help people on a low income “get off benefits and allow pensioners a decent income” is to be debated by MPs in Parliament. Nearly 218,000 people across the UK have shown their support for the proposal.
In a new update from the Petitions Committee, it has confirmed that the topic will be debated by MPs on May 12, despite a written response from the Treasury in February which stated it has “no plans to increase the Personal Allowance to £20,000”.
The UK Government recently announced the Personal Allowance will remain frozen at £12,570 until the start of the 2028/29 financial year. However, petition creator Alan David Frost argues it is “abhorrent to tax pensioners on their State Pension when it is over the personal allowance” threshold and says the increase would “inject more cash into the economy”.
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The ‘raise the income tax personal allowance from £12570 to £20000’ petition states: “We think this would help low earners to get off benefits and allow pensioners a decent income.
“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.”
Responding to the proposals in the petition on February 20, the Treasury said: “The Government is committed to keeping taxes for working people as low as possible while ensuring fiscal responsibility and so, at our first Budget, we decided not to extend the freeze on personal tax thresholds.”
It continues: “The Government has no plans to increase the Personal Allowance to £20,000. Increasing the Personal Allowance to £20,000 would come at a significant fiscal cost of many billions of pounds per annum. This would reduce tax receipts substantially, decreasing funds available for the UK’s hospitals, schools, and other essential public services that we all rely on.
“It would also undermine the work the Chancellor has done to restore fiscal responsibility and economic stability, which are critical to getting our economy growing and keeping taxes, inflation, and mortgages as low as possible.”
The response added that the UK Government keeps all taxes under review as part of the policy making process and any changes would be announced by Chancellor Rachel Reeves at the Spring Statement or Autumn Budget.
You can read the full response on the petitions-parliament website here.
State Pension and tax
The full New State Pension is currently worth £11,502 in the 2024/25 tax year and will rise to £11,973 in 2025/26.
This leaves just £1,068 in the current year before the tax threshold is exceeded and £597 in 2025/26.
The most important thing to remember is someone on the full New State Pension will not pay income tax, but older people with additional income through employment, private or workplace pensions, might need to pay tax.
For most people, this would be paid automatically through PAYE on employment and tax on private pensions. Anyone who doesn’t pay tax automatically pays tax through deductions, would receive a tax bill from HMRC the following summer to be paid by January in the next year.
There has been a fair bit of speculation on the number of pensioners who will pay tax, but currently of the 13 million State Pensioners across the UK, nearly 8m (62%) already pay some tax in retirement, so this isn’t something new.
And with auto-enrolment in the workplace – now in its 13th year – more people will benefit from increased income in retirement and will probably pay tax – which will typically be deducted from their private pension.
It’s important to understand any tax to be paid in retirement is based on the amount of income earned above the threshold – not the total additional income. For example, if someone has a total annual income of £13,000, they will pay tax on £430 – which is the amount above the £12,570 threshold.
Those affected would then have to pay HMRC 19 per cent of their income above the threshold, which is the starter rate of tax in Scotland (20% in England).
Income rates and bands – Scotland
- £12,571 to £14,876 – 19%, Starter rate
- £14,877 to £26,561 – 20%, Scottish basic rate
- £26,562 to £43,662 – 21%, Intermediate rate
- £43,663 to £75,000 – 42%, Higher rate
Income rates and bands – England
- £12,571 to £50,270 – 20%
- £50,271 to £125,140 – 40%
- over £125,140 – 45%
State Pension payments 2025/26
State Pension payments will rise on April 7, however, people will not see an immediate increase as the contributory benefit is paid in arrears.
Full New State Pension
- Weekly payment: £230.25 (from £221.20)
- Four-weekly payment: £921 (from £884.80)
- Annual amount: £11,973 (from £11,502)
Full Basic State Pension
- Weekly payment: £176.45 (from £169.50)
- Four-weekly payment: £705.80 (from £678)
- Annual amount: £9,175 (from £8,814)
To check your own future State Pension payments, use the online forecasting tool on GOV.UK here.
