The personal allowance stands at £12,570 and has been frozen since 2021, with the freeze extended until 2031. This has pulled more low earners and pensioners into tax through fiscal drag. Proposals to scrap it entirely and use the revenue to cut the basic rate of income tax have been discussed as a way to flatten the tax schedule and improve work incentives for many earners.
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4 Opinions
Can't see how that would help low income households. It is not logical. At present the 12,500 just works for lower incomes, you take that away and they will have even less money, claims for help to pay rents and council tax etc, will increase.
Scrapping the personal allowance while simply lowering the basic rate is unlikely to benefit the lowest earners unless the reform is specifically designed to protect them, which it won’t be.
Scrapping the personal allowance is a textbook regressive tax hike disguised as reform. Taking away the £12,570 tax-free buffer clobbers the poorest: part-time workers, carers, and low-income pensioners... taxing them from their very first pound just to hand a rate cut to higher earners.
No, it should be reformed by scrapping/replacing all existing taxes (apart tariffs) with one sale (turnover) tax between 30%-40%. Simple, unavoidable, no tax loops and should satisfy budget needs. Seriously cut down budget.