Personal Allowance £45,000 NEW TAX LIMIT 2025:: Many people in the UK are now talking about the need to change how income tax works. At the centre of this talk is something called the Personal Allowance — the amount of money you can earn each year before you start paying income tax.
As of 2025, this amount is set at £12,570. But with rising costs and wages not growing much, many people feel this limit is too low. They believe it should be raised to £45,000, so that low- and middle-income earners can keep more of what they earn.
Let’s break down what this means and why there’s growing support for such a big change.
What Is Personal Allowance in the UK?
The Personal Allowance is the yearly income you can earn without paying any income tax. For example, if you earn £12,000 a year, you won’t pay any income tax because you’re under the limit. But if you earn £20,000, you will have to pay tax on the extra £7,430 (after subtracting the allowance).
This rule is meant to be fair, but many people feel the current allowance is outdated. With prices for food, housing, and electricity going up, it’s becoming harder for average people to make ends meet. That’s why some are calling for a big change.
Why Some People Want the Allowance Raised to £45,000
Many believe the allowance should match today’s cost of living. Supporters of the change say the current system hits the poor harder than the rich. Here’s why they want it raised:
The cost of living has gone up, but the tax-free limit hasn’t changed much in recent years.
People with low or average incomes are struggling to manage their expenses, and paying income tax makes things worse.
Raising the allowance to £45,000 would help workers keep more of their money and reduce stress caused by tight budgets.
They also say that some wealthy people find legal ways to avoid tax, while regular earners can’t.
So, if the allowance goes up, more people can keep their full salary without deductions — up to that £45,000 mark.
How It Could Help Lower-Income Families
If the government agrees to raise the Personal Allowance to £45,000, this would bring major relief to millions:
- Anyone earning less than £45,000 would pay zero income tax. That’s more money in their hands for food, rent, school fees, and travel.
- Families with small children, elderly parents, or other expenses would find it easier to manage monthly bills.
- It would shift more tax responsibility to those who earn higher incomes and reduce pressure on struggling families.
Right now, people who earn less often end up giving away a larger part of their salary in taxes, compared to the very rich who know how to lower their tax bills using legal tricks.
Is the Current Tax System Helping the Rich?
Yes, that’s what many people believe. Wealthy people often use tax planning, businesses, or investments to reduce their tax legally. But someone working a normal job doesn’t have those options. They have to pay tax on anything above the personal allowance, and that feels unfair.
Raising the allowance would fix some of this imbalance. It would give more financial breathing room to the people who need it most.
Will the Government Lose Money?
If the allowance goes up to £45,000, yes — the government would collect less income tax. But those supporting the change believe:
This money would still help the economy, because people would spend more on shopping, services, and bills.
More spending means more business, and more business means more jobs and growth.
People wouldn’t need as much help from the government, like benefits or tax credits, so the government might save money in other ways.
Supporters feel the real benefit would be a stronger, fairer society.
Is It Time for Change?
In simple terms, raising the UK’s Personal Allowance could be a game-changer for workers and families. Many believe the current tax system no longer matches today’s reality. Costs are high, but incomes haven’t kept pace. Allowing people to earn up to £45,000 without paying tax would reduce stress, increase spending power, and make things fairer.
Whether the government agrees or not, one thing is clear — people want a system that puts regular earners first, not just the rich. A higher allowance could be the first big step towards that goal.
FAQ
What is the Personal Allowance in the UK?
It is the amount of income you can earn each year before you have to start paying income tax. For 2025, it is £12,570.
Why do people want the Personal Allowance increased to £45,000?
Because it would allow low- and middle-income earners to keep more of their income and reduce financial stress, especially with rising living costs.
Who benefits most if the allowance is raised?
People earning less than £45,000 would benefit the most, as they wouldn’t pay income tax at all under the new limit.
Would raising the allowance harm the economy?
Supporters say it would actually help, by giving people more money to spend, boosting the economy, and reducing the need for government support.
Is the current tax system unfair to the poor?
Many believe it is, as poor people often pay a larger share of their income in tax, while some rich individuals use legal ways to pay much less.
