Tax, inflation and a cost-of-living crisis: presumably, everyone but the very wealthy has been affected and forced to make adjustments, in order to make ends meet. Take one aspect of income: the personal tax-free allowance. This is the annual amount of income you can earn before paying income tax and, since 2021/22, this allowance has been £12,570. Both previous and current governments have chosen not to raise it, and this is not due to be reviewed until 2028.
The impact of inflation means that, whilst the government continues to take tax above this rate, the taxpayer is having to spend more of their earnings on goods and services (in other words ‘tighten their belts’) as prices rise across the board, in order to get by. Spare a thought for those increasing numbers of people who can’t make ends meet.
At the time of writing, earlier that day, I had spoken with a volunteer helping out at a foodbank, who explained that there are people now making use of foodbanks who are both in work and have mortgages, and that this number is increasing!
Staggering, isn’t it?
Personal tax allowance
Let me explain the reason behind what I am going to ask you to do (don’t worry it only takes a few moments of your time, if you want to, of course). Firstly, go to the Bank of England’s Inflation Calculator, key in the date when the personal allowance was frozen, and the amount, and this is what it comes back with:
Had the allowance not been frozen, this is the amount that is now needed to have kept pace with inflation. And all in just five years.
Why hasn’t the government moved this allowance in line with inflation? Not that I am a spokesperson for the government, but I have a good hunch. The national debt and the interest on that debt is, and I find myself using this word again and again, ‘staggering’. Yet that debt arises, in part, out of decisions that subsequently prove to have been a complete waste of money.
Take one example: the money paid to Rwanda (already over £700mn) for a failed asylum scheme. Not one penny is likely to be repatriated and the costs, well, no one seems to know, with any degree of accuracy, how much it has cost to date.
Link the personal tax allowance to inflation
It is not the point of this article to list where the public purse has not been used effectively. So, on now to the part where you can choose whether to do something that could benefit taxpayers.
I have followed two government petitions recently; one of these is asking to have the allowance increased to £20k, and another to £45k. The latter of these is unlikely to happen. However, £20k is not unreasonable.
The former petition achieved more than 250,000 signatures. At 10,000 signatures a written response is issued and, once a petition reaches 100,000 signatures, it is considered for debate. The response to this petition was that the government would not be deflected from its fiscal and budgetary responsibility. How disappointing that the government simply can’t think outside the box about how this could be accommodated.
Inflation is not caused by you or me. It is determined by supply and demand and affected by global market forces, some of which can be self-inflicted eg Brexit.
Sign the petition
Enough on inflation and the cost of living, as well as slating governments for contributing to this mess.
In this petition, I am asking for the personal tax-free allowance to be linked to a cost-of-living index, so that no one is disproportionately impacted by rising prices, as the root cause does not lie with the individual taxpayer.
The petition can be found by following this link. Or by scanning this QR code.
Once on the UK government petitions website, you will be asked for some information to confirm you are a UK citizen and an email address. Be sure to click the confirmation link in your email, as it is only when you do this that your signature will count towards the total. You can also share it with friends, colleagues etc.
