Tax allowance Frozen till 27-28

Madrick

Does anyone know what will likely happen in year 2027-28?

The govt have frozen the tax allowance at £12570 per year
(the amount you can earn before paying any tax)
This is frozen until 2027-28

By which time under normal circumstances it would have grown to circa £15,990

So what happens when the freeze ends.... 
Do we just go to an increase to circa £13000 or will it be adjusted back to where it should be around £15-16k? 

booneruk

It'll be down to the government of the time to decide whether to freeze or lift the allowances, and if the latter they'll need to budget for whatever they're lifting them to (which is why there's a chance they will remain frozen again).

Hoenir

If there's a change of Government. Then anything could happen. Nothing is set in stone. 

400ixl

We don't even know who will be in power then, let alone what their policies will be.

I personally doubt it will take a big jump if it rises at all. They will be hoping to have inflation down by then so perhaps it may go to £13k which is just under a 2% rise.

National insurance rate appears to be their lever of choice at the moment. That and eroding other tax benefits such as savings and capital gains tax.

MattMattMattUK

Anyone is making a full on guess, there will be a different government by then, the economy will be different. If I had to take a punt I would guess a small increase, but certainly not taking it up to £15k+. Personally I think it should be abolished, but admit we are unlikely to see that happen. 

Albermarle

400ixl said:

We don't even know who will be in power then, let alone what their policies will be.

I personally doubt it will take a big jump if it rises at all. They will be hoping to have inflation down by then so perhaps it may go to £13k which is just under a 2% rise.

National insurance rate appears to be their lever of choice at the moment. That and eroding other tax benefits such as savings and capital gains tax.

I was not aware of that ( in bold) . Can you clarify any negative tax changes directly affecting savings?

In any case the UK tax regime for savings interest is very generous by international standards.

MetaPhysical

The rises in the PA between 2010 > 2015 were one of the LibDem conditions of theirs to enter coalition with the Tories.  It was about £5k-ish in 2010.  It rapidly increased every year during the coalition when the Tories had to increase it to remain in power.  Ever since the Tories have been governing with their own majority they have been less keen on big rises to the PA and Higher Allowance.  And of course, from 2021 they have been frozen - until 2028.  So they have basically undone all the rises that took place during the coalition years and taken the PA roughly where it would have been.  I am not making political points here but IMO the PA should be hugely higher to encourage work.  It should be £15k at least, especially so from the Conservative Party - the erstwhile "Party of Low Taxation"

penners324

Labour will be in power, they're very likely to put the allowance down to £7k

400ixl

Albermarle said:

400ixl said:

We don't even know who will be in power then, let alone what their policies will be.

I personally doubt it will take a big jump if it rises at all. They will be hoping to have inflation down by then so perhaps it may go to £13k which is just under a 2% rise.

National insurance rate appears to be their lever of choice at the moment. That and eroding other tax benefits such as savings and capital gains tax.

I was not aware of that ( in bold) . Can you clarify any negative tax changes directly affecting savings?

In any case the UK tax regime for savings interest is very generous by international standards.

The tax free limits on savings interest are equally not rising, ISA limits have been the same for years. Two similar examples to income tax.