Andy Burnham Reviews Personal Tax Allowance for Autumn Budget

Prime Minister Andy Burnham announced his government will review the frozen personal tax allowance during the upcoming Autumn Budget. The allowance has remained at £12,570 since 2021 and is currently scheduled to stay frozen until 2031, a policy that increases the tax burden on lower earners and pensioners as inflation erodes the threshold's value.

Burnham and Chancellor John Healey are considering a modest increase of £500, which would save basic-rate taxpayers approximately £100 annually. While the Prime Minister indicated he wants to ease cost-of-living pressures, he clarified there is "no commitment at this point to change." The issue became a priority after Burnham identified the tax freeze as a primary concern for voters during his campaign in the Makerfield constituency.

Fiscal analysts warn that such moves carry significant costs. Experts from AJ Bell suggest a £500 increase could cost the Treasury £5 billion annually, while the Institute for Fiscal Studies estimates that indexing the allowance to inflation would cost approximately £9 billion per year. Because the government has already committed to other spending—including a £2 bus fare cap and scrapping VAT on household electricity—analysts suggest the budget may require spending cuts or new tax rises to offset the cost of the allowance increase.