Burnham Reopens Debate on Raising UK Personal Tax Allowance

Prime Minister Andy Burnham told broadcasters during a visit to Bath that the government will examine whether to raise the £12,570 personal income-tax threshold, a policy he had suggested earlier in the week. The suggestion follows a period of mixed signals, with aides indicating the idea had been dropped before Burnham revived it.

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The personal allowance has been frozen for five years, meaning inflation-driven wage growth has pushed more workers into paying income tax. Burnham cited “frustration about the personal allowance” he heard while campaigning in a recent by-election, noting the issue was “lodged in my mind.” The Labour Party’s 2024 manifesto, inherited by Burnham, promises not to raise income-tax rates, limiting options for financing a higher allowance.

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Analysts at EY estimated that a £100 increase in the allowance would cost the Treasury more than £1 billion, while a 10 % rise would cost about £11.7 billion. Investors responded with caution: yields on the benchmark 10-year UK government bond climbed to a two-year high as markets sought clearer fiscal plans. The government has simultaneously announced the scrapping of a 5 % energy-bill tax from October and a planned reduction in the national bus-fare cap from £3 to £2 in England outside London, set to take effect in January.

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Chancellor John Healey joined the pledge to ease cost pressures for working Britons while maintaining budgetary prudence.

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• “There is no commitment at this point to change, but we will look at that at the budget,” — Andy Burnham, UK prime minister

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• “It’s just perhaps the way politics is these days and the way people report things, but that was an honest answer,” — Andy Burnham, UK prime minister

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• “We’ve got to show that our commitment to the fiscal rules is real, and we’re prepared to make difficult decisions in relation to that,” — Andy Burnham, UK prime minister

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