A campaign is calling for Rachel Reeves to implement a new tax code for pensioners for them to double the personal tax allowance
Concerns have been raised that Rachel Reeves could freeze or even lower tax thresholds in the Budget (Image: Ian Forsyth, Getty Images)
A campaign pressuring the Government to grant pensioners a special exemption to avoid the tax affecting the lowest earners is nearing a significant milestone. A petition on the Parliament website is advocating for a new tax code for pensioners that would double their personal tax allowance.
At present, anyone earning over £12,570 begins paying tax at the standard rate of 20 per cent. This rate has been frozen since 2021 and due to the ‘fiscal drag’ process, many more individuals, including some of the country’s lowest earners, are now paying tax.
There are fears that even those receiving the basic state pension could soon start paying income tax under the ‘triple lock‘ system. The State Pension is projected to increase by 4.8% in April 2026 due to the government’s triple lock guarantee.
This will raise the full new State Pension from £230.25 to £241.30 per week (£12,548 per year), which is just below the threshold.
The government has already stated that the freeze will continue until 2028, meaning subsequent years will begin paying income tax. There are whispers that Chancellor Rachel Reeves will announce an additional freeze and possibly even alter the thresholds in the Budget on November 26.
Government will be compelled to respond, setting out its stance and whether it will contemplate a change.
It could heap pressure on ministers ahead of the Budget, and if it reaches 100,000 signatures it could also trigger a debate with MPs.
The petition, launched by Timothy Hugh Mason says: “We want the government to introduce a new tax code for state pensioners, set at double the basic threshold. If this was implemented, pensioners would receive a higher tax-exempt limit, but wealthier pensioners would still pay tax.
“We think that people with small private or workplace pensions are currently being taxed unfairly.”
Pressure is mounting on the government over tax allowances.
Another petition has surpassed 10,000 signatures demanding the basic threshold be lifted from £12,570 to £20,000.
A petition, started by Shannon Keene, states: “Raise the income tax personal allowance from £12,570 to £20,000. This would help with increasing rent, mortgages, Council tax, and Gas and Electric bills. Some families can’t afford to go back to work after children due to childcare costs wiping out their whole income!”.
“We think that we are currently paying ridiculous amounts of tax, and that minimum wage isn’t even enough to support an average family. We believe that this would lead to a massive increase in people willing to look for work, instead of people not wanting to, due to it being too expensive to live now.”
The matter has triggered countless petitions, demonstrating the powerful public feeling nationwide.
Earlier this year, one petition demanding the threshold be lifted to £20,000 gathered an impressive 281,792 signatures on the Parliament website before it stopped accepting additional supporters during the summer.
This led to a Parliamentary debate where the Treasury calculated the expense at £50 billion.
Underlining the scale of public worry, a fresh petition has been established pushing for the income tax personal allowance to rise from £12,570 to £20,000.
The earlier petition’s position as one of the biggest ever documented on the parliament website was viewed by campaigners as proof of robust public feeling on this matter.
Currently, a basic tax rate of 20 per cent applies to earnings above £12,570, while those earning more face a 40 per cent rate on income over £50,270 – both thresholds have been frozen since 2021.
James Murray, Exchequer Secretary to the Treasury, has previously warned that raising the tax threshold to £20,000 would create a substantial financial burden.
He said: “I recognise the views of everyone who has put their name to the petition, and let me be clear that, as a Government, we want taxes on working people and on pensioners, who have worked hard all their lives, to be as low as possible.
“We were elected to put more money in people’s pockets and, crucially, we were elected to do so in a fiscally responsible way. That is a critical point to understand.
“We aim to keep taxes on working people and pensioners as low as possible, but if we were to heed the calls of some Opposition parties and abandon fiscal responsibility, it would lead to economic chaos and the collapse of public services, and that would harm working people and pensioners the most.
“Raising the personal allowance to £20,000 would cost more than £50 billion. That is more than the £45 billion of unfunded tax cuts announced by Liz Truss in her disastrous mini-Budget.”
To view the petition click here.
