The Personal Allowance is the amount of money you can earn before you start paying tax
One of the most significant factors affecting how much money you retain each year, and how much is claimed by HM Revenue and Customs, is 'fiscal drag'.
The tax-free Personal Allowance has been frozen for several years and, barring a policy reversal from the new government, is expected to remain so for at least another four years, until 2028. This means that due to 'fiscal drag', an increasing number of people will end up paying more tax on their earnings as wages rise to offset inflation and more people earn income subject to income tax.
However, there is one method to increase your tax-free Personal Allowance - but it requires you to be married or in a civil partnership with a significant disparity in take-home pay. Married couples or those in a civil partnership can boost their tax-free income by £252 in any given financial year. They can also backdate their claim for four additional years to receive a tax rebate of up to £1,242.
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Petition Calls for UK Personal Tax Allowance to Rise to £45,000More than 28,600 people have signed a petition demanding an increase in the UK's Personal Tax Allowance from £12,570 to £45,000. Petition creator Denver Johnson argues the current threshold disadvantages the poorest members of society. The petition has garnered enough signatures to receive a written response from the UK Government and could be debated in Parliament if it reaches 100,000 signatures.
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Petition Calls for Personal Tax Allowance Increase to £45,000A petition urging the UK government to raise the personal tax allowance threshold from £12,570 to £45,000 has surpassed 30,000 signatures. Organizers argue that the current freeze on tax allowances disproportionately impacts low-income earners and exacerbates income inequality.
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Fiscal Drag: How the Frozen Personal Allowance Affects Your FinancesThis article explores the impact of fiscal drag on individuals' finances due to the frozen personal allowance. It explains how the freeze, combined with rising wages, pushes more people into higher tax brackets. The article also highlights the Marriage Allowance scheme, which allows couples with income disparities to transfer a portion of their personal allowance, reducing their overall tax burden.
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Petition Demands UK Tax Allowance Increase to £45,000A petition calling for a significant increase in the UK's Personal Tax Allowance has garnered over 28,000 signatures, demanding a rise from £12,570 to £45,000 for everyone in Great Britain.
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State Pensioners Face Tax Rise as Government Keeps Allowance at £12,570Liberal Democrat MP Ben Maguire urges Chancellor Rachel Reeves to raise the tax allowance for state pensioners to £15,000 to prevent more individuals from being taxed. Critics argue that the current plan, keeping the allowance at £12,570 until 2028/29, is unfair as the state pension is almost equal to the allowance, meaning a small increase in pension payments could push individuals over the threshold. Treasury Minister James Murray defends the government's position, stating the commitment to keeping taxes low for pensioners while ensuring fiscal responsibility. The full New State Pension is valued at £11,502 in the current 2024/25 tax year, rising to £11,973 in 2025/26.
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800,000 More Brits Face Tax Bills on Savings as Allowance Freeze PersistsPersonal savings allowance freezes are leading to an increased number of Britons facing higher or new income tax bills due to interest earned on their savings. Experts warn that millions could be caught off guard, prompting a potential surge in the popularity of tax-free ISAs.
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