Growing signatures and debate demanding changes to UK personal tax thresholds
Rachel Reeves, the Chancellor, is the person who initiated it, and as Denver Johnson claimed for less than £45,000 between the payments of income tax, people would take part in signatories sum it was declared to be in accord with the personal income tax free-pouring from £12,570. The number of signatories to hit more than 30,000.
Understanding the issue: What is “fiscal drag”?
From the year 2021/22, the UK government has kept many tax allowances frozen, including personal tax exemptions. This is often referred to as “fiscal drag”. This means that taxable income rises without changing tax rates.
When wages rise due to inflation, more people become taxpayers and some move into higher tax brackets. While this is an effective way of raising revenue for the government, it has had an imbalanced impact on lower-income people.
Petition aims and growing support
Denver Johnson argues that the current tax system promotes inequality. He said,
“Personal tax exemptions are set unfairly low, punishing the poorest in society and benefiting the rich.”
The petition has doubled the number of signatures in just a few days, passing the 30,000 mark. It is now eligible for an official response from the Department for Work and Pensions. If the petition reaches 100,000 signatures, it will be considered eligible for a debate in Parliament.
Economic impact of keeping tax thresholds fixed
Keeping tax exemption thresholds fixed has wide-ranging consequences.
The Office for Budget Responsibility (OBR) estimates that by 2025/26 the policy will pull 1.3 million new taxpayers into the tax system and move 1 million into higher tax brackets.
Experts’ opinion
Martin Lewis, a financial expert, explains how fixed thresholds increase tax burdens. He said:
“As your income rises, more of your money is taxed. This ensures the government gets steady revenue.”
Victor Bulmer-Thomas, of the London School of Economics, warned that the policy hits low-income groups hard. They say that
“The typical worker in the lowest income bracket has seen their tax rate rise by 37.7%, much more than the basic rate of 20%.”
They also said such a policy could anger voters and lead to political consequences.
Government position on tax thresholds
Despite public anger, Rachel Reeves’ recent Budget confirmed that income tax and National Insurance thresholds would remain frozen until 2028.
The decision is in line with the policies of the previous Conservative Government, although there had been some speculation that the Labour Party could raise it to 2030.
The move is a way for the government to generate revenue, but critics say it amounts to a “stealth tax” on the most vulnerable.
Way Forward
As public awareness grows, the success of this petition could put pressure on the government to reconsider the tax caps. However, it remains to be seen whether it will lead to any concrete changes or become a source of inspiration for future political campaigns.
This issue of “fiscal drag” underscores the broader debate about how the government should balance revenue needs and a “fairer tax system”.
Conclusion
This petition reflects growing public anger. Keeping tax exemption caps stagnant has increased the economic pressure on low-income families, and this policy could have serious implications for inequality and public trust in the long term.
FAQs
Who qualifies for the £45,000 tax relief in 2025?
Individuals earning below £45,000 may qualify, subject to income thresholds and government guidelines.
How can I claim the £45,000 tax relief?
Claim through official tax filings. Follow HMRC’s updates for eligibility and application steps.
What benefits does the £45,000 tax relief offer?
It reduces tax burdens, increases disposable income, and supports wealth growth by lowering taxable income.