Miatta Fahnbulleh said Andy Burnham will look at the tax-free personal allowance on his first day as prime minister. He framed the move as part of giving people more “breathing space” on the cost of living.
Burnham said changing the allowance would be “difficult” in the current economic circumstances. He also said reversing the freeze would mean the money would have to be found from elsewhere or borrowed.
Burnham and John Healey
The prime minister said policies will be announced on Tuesday, his first full day in the job. He also said he is looking at the tax-free personal allowance ahead of his first Budget in the autumn.
The issue is practical for people in England, Wales and Northern Ireland because income tax and National Insurance thresholds are frozen until April 2031. That means any change to the allowance would alter how much people can earn before they start paying income tax, while the present freeze continues to hold revenue in place for the government.
Cost of living pressure
Burnham said cost of living is a key issue for him. He said people cannot go out for a pint on a Friday, cannot take the kids out and cannot go on holiday owing to the pressure on their finances.
That concern has already shaped recent policy choices. In April, Sir Keir Starmer and Rachel Reeves removed £150 from a typical annual domestic energy bill by cutting some levies and moving others onto taxation.
Adam French and bills
Adam French of Moneyfacts added another layer to the picture, saying: “A more volatile world is a more expensive world.” He was pointing to the way energy bills, food and mortgages soon went up again after the impact of the US-Israeli strikes on Iran.
For readers, the immediate issue is not a finished tax change but the direction of travel. Tuesday should show whether Burnham plans to ease the allowance, ask for “a little bit more” in tax from some people, or leave the current freeze intact until his first Budget in the autumn.
