Over 84,000 people have signed a petition urging Chancellor Rachel Reeves to increase the tax threshold for state pensions in her upcoming Spring Statement. The campaign, led by Dennis Reed on Change.org, calls for the personal tax allowance—the amount you can earn before paying income tax—to be raised from £12,570 to £20,000. With the Spring Statement scheduled for March 26, campaigners are hopeful that the government will address the issue, which has left many pensioners struggling financially.
The petition highlights the impact of the frozen tax threshold, which has remained at £12,570 since 2021. This freeze, combined with rising living costs, has pushed more low-income earners and pensioners into paying income tax. Dennis Reed, the petition organizer, warned that if the threshold isn’t raised, the new state pension could exceed the personal allowance by 2026, leading to the “ludicrous situation” of pensioners being taxed on income they’ve already paid for through National Insurance contributions. He argued that this would plunge many pensioners into poverty, calling it a “political choice.”
Reed shared the story of Colette, a 75-year-old widow at risk of poverty, to illustrate the real-life impact of the frozen threshold. Another supporter of the petition, Susan, a widow, expressed frustration that despite paying taxes all her life, her state pension is now being taxed. She said the tax taken from her pension could significantly help cover her disability-related expenses.
The campaign has also gained support from Alan Frost, who started a similar petition calling for the personal allowance to be raised to £20,000. Frost argued that this change would help low earners move off benefits and allow pensioners to enjoy a decent income. However, the Treasury has responded by stating that increasing the personal allowance to £20,000 would cost billions of pounds annually, reducing funds available for essential public services like hospitals and schools. A spokesperson emphasized the government’s commitment to keeping taxes low while maintaining fiscal responsibility.
The frozen tax thresholds have been criticized for creating a “fiscal drag,” where more people are pulled into higher tax brackets as their incomes rise with inflation, even if their real purchasing power hasn’t increased. Currently, the basic rate of income tax (20%) applies to earnings over £12,570, while the higher rate (40%) kicks in at £50,270. Both thresholds have been frozen since 2021, exacerbating the financial strain on low and middle-income households.
The petition reflects growing frustration among pensioners and low earners who feel squeezed by rising living costs and stagnant tax thresholds. Campaigners argue that raising the personal allowance would provide much-needed relief, particularly for those on fixed incomes like state pensions. However, the government has indicated that it has no plans to increase the personal allowance to £20,000, citing the significant cost and the need to prioritize fiscal stability.
What do you think? Should the government raise the personal tax allowance to help pensioners and low earners, or would the cost be too high for public services? Share your thoughts!
