Proposed Tax Reforms Could Save Workers £1,486 Annually
Tax update over £1,400 HMRC change affecting millions of workers
Mirror
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Upcoming tax reforms in the UK may alleviate financial burdens for millions by potentially raising the personal allowance to £20,000 from the current £12,570. This change could save basic rate taxpayers £1,486 annually, as living costs have risen while the allowance remains frozen until April 2031.
- 01A petition to raise the personal allowance to £20,000 has garnered significant public support, with over 94,000 signatures.
- 02Currently, the personal allowance is frozen at £12,570, impacting low and middle earners amid rising living costs.
- 03The basic rate of income tax is 20%, with higher rates applying to incomes above £50,270 and £125,140.
- 04Tax changes set for April 2027 include increased rates on taxable interest income and a reduction in the annual ISA allowance.
- 05Inheritance tax will be broadened to include most unused pension funds starting in 2027.
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Significant tax reforms are proposed in the UK that could ease the financial strain on millions of households. Campaigners are advocating for an increase in the personal allowance from £12,570 to £20,000, which would save basic rate taxpayers approximately £1,486 annually. This allowance has been frozen since 2021, while living costs have surged, leading to higher effective tax burdens on workers. The Labour Party has confirmed that the current threshold will remain unchanged until at least April 2031. The petition for the increase has gained substantial traction, with over 94,000 supporters. Additionally, tax changes set to take effect in April 2027 include a rise in rates for taxable interest income and a reduction in the annual ISA allowance from £20,000 to £12,000 for cash accounts. Furthermore, inheritance tax will be expanded to cover most unused pension funds, imposing a 40% levy. These reforms are seen as crucial in supporting low and middle earners during a cost of living crisis.
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The proposed increase in the personal allowance could significantly benefit low and middle-income workers by providing them with more disposable income amid rising living costs.
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