There has been growing discussion about raising the UK’s income tax personal allowance from £12,570 to £20,000, with campaigners highlighting how this would help pensioners and low-income earners. However, despite the attention, the government has confirmed there are no current plans to make this change.
Current Income Tax Limit
As of the 2025/26 tax year, the personal allowance — the amount you can earn before paying income tax — remains frozen at £12,570. This freeze means more people, especially pensioners, are gradually brought into the tax system as pensions and wages rise.
What Was Proposed
A public petition called for the allowance to be raised to £20,000, arguing that it would protect millions of low earners and retirees from tax liabilities. The issue was debated in Parliament in May 2025, but the Treasury rejected the proposal, estimating the change would cost between £50 billion and £65 billion annually.
Impact on Pensioners
The State Pension for 2025 is nearly £12,000 per year, which means many pensioners are close to or over the tax threshold. With the personal allowance frozen, more retirees are required to pay income tax even if their only significant income is their pension. This has been described as a “stealth tax” on older citizens.
Government’s Position
The government has made it clear that it has no intention of raising the allowance to £20,000. Instead, it argues that the current freeze is necessary to protect public finances. While the debate continues, the official policy remains unchanged.
Conclusion: The personal allowance will stay at £12,570, with no confirmed plan to raise it to £20,000. While the idea would indeed provide a significant financial boost to pensioners and low-income households, the cost to the Treasury is the main barrier. Pensioners may need to explore existing reliefs such as the Marriage Allowance, Blind Person’s Allowance, or tax-efficient savings strategies to reduce their liability.
Disclaimer: This article is for informational purposes only and is based on UK government announcements as of September 2025. Policies and allowances can change, so always check the official for the latest updates.
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