UK Taxpayers Hope for £45,000 Personal Allowance – But Is It Real?

A widely circulated claim suggests that the UK government has confirmed an increase in the Personal Allowance from £12,570 to £45,000. This has sparked excitement among taxpayers hoping for major relief. However, is this claim true? Has the government actually approved such a drastic tax-free threshold hike?

In this guide, we’ll separate fact from fiction, explain the UK’s tax allowance system for 2025, and provide clear insights into how tax changes affect you.

Is the UK Raising the Personal Allowance to £45,000?

Despite social media claims, the UK government has not confirmed an increase in the Personal Allowance to £45,000. The existing tax-free threshold remains at £12,570, frozen until 2028.

The source of the £45,000 figure is a public petition, not government policy. While the idea has gained traction, it has not been adopted or legislated.

Understanding the Personal Allowance

The Personal Allowance is the amount of income you can earn each year before paying income tax.

As of April 2025, the thresholds remain:

• £12,570 tax-free income
• 20% tax on earnings from £12,571 to £50,270
• 40% tax on earnings from £50,271 to £125,140
• 45% tax on earnings above £125,140

The Personal Allowance has been frozen since 2021, meaning it hasn’t increased with inflation, pushing more people into higher tax brackets—a phenomenon known as “fiscal drag” or “stealth tax.”

Where Did the £45,000 Claim Come From?

The idea of increasing the Personal Allowance to £45,000 originated from a public petition submitted to the UK Parliament. Supporters argue that raising the threshold would:

• Help low- and middle-income workers
• Ease the cost-of-living crisis
• Increase disposable income

However, in response to the petition, the UK Treasury stated:

“Increasing the Personal Allowance to £45,000 would cost the UK government approximately £39 billion per year, significantly impacting public services and government funding.”

This confirms that the proposal is not part of any official 2025 tax plan and remains a public suggestion rather than a government decision.

How Would a £45,000 Personal Allowance Impact Taxpayers?

Example: How Much Tax Would You Save?

Let’s take Sarah, a nurse earning £32,000 per year:

Current Tax System

• Taxable Income: £32,000 – £12,570 = £19,430
• Tax at 20%: £3,886

If Allowance Was £45,000

• Taxable Income: £0
• Total Tax Savings: £3,886 per year

For taxpayers earning under £45,000, this would mean paying zero income tax, providing a significant financial boost.

A Brief History of UK Tax Allowances

The Personal Allowance rose steadily until 2021 but has since remained frozen to increase government tax revenue—a method sometimes referred to as a “stealth tax.”

Who Would Benefit Most From a £45,000 Personal Allowance?

Biggest Winners

• Full-time employees earning up to £45,000
• Freelancers & small business owners under this threshold
• Middle-class families with dual incomes

Who Would See Less Benefit?

• Part-time workers earning under £12,570 (already pay no tax)
• Higher earners (still taxed above £45,000)
• Those receiving means-tested benefits (where taxable income is less relevant)

The Challenges of Raising the Personal Allowance

While increasing the Personal Allowance would benefit taxpayers, it comes with economic trade-offs:

Pros:

• More disposable income for workers
• Reduced tax burden for middle-income families
• Boosts consumer spending and economic activity

Cons:

• Would cost the government £39 billion annually
• Potential cuts to public services (NHS, education, welfare)
• Higher earners would also benefit, raising fairness concerns

While taxpayers support tax relief, balancing it with government spending is a challenge.

How to Check Your Tax Allowance and Optimize Your Taxes

Even though a £45,000 allowance isn’t happening, you can still reduce your tax burden:

1. Check Your Tax Code

• Go to: GOV.UK Personal Tax Account
• Sign in: With your Government Gateway ID
• Review: Your income, tax paid, and tax code

2. Claim Extra Allowances

• Marriage Allowance – Transfer £1,260 of your allowance to your spouse
• Work Expenses – Claim for work uniforms, tools, or professional fees
• Pension Contributions – Reduce taxable income via workplace pensions

3. Support Tax Reform (If You Want Change)

• Write to your MP to express your concerns
• Sign petitions supporting tax relief
• Stay informed about upcoming Budget announcements

While the idea of a £45,000 Personal Allowance is appealing, it remains a viral claim, not government policy. The UK Treasury has confirmed the allowance will remain at £12,570 until at least 2028.

That said, tax reform discussions are ongoing. With rising inflation and bracket creep, taxpayers should stay informed, claim available tax reliefs, and push for fair policies.

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