New Prime Minister hints at lifting the personal income tax allowance
Andy Burnham has hinted he might lift the personal income tax allowance and failed to rule out introducing a new 50p tax rate.
The new Prime Minister expressed concerns that a freeze in the personal allowance meant that more pensioners are being dragged into paying income tax.
The income level at which people start to pay income tax has been frozen at £12,570 since 2012, five years ago, and is due to remain frozen until 2031.
This means that as people's pay and pensions increase, more and more are finding that they have to pay income tax.
Lifting the allowance would pull tens of thousands of people out of paying income tax altogether.
Speaking to journalists in the garden of 10 Downing Street shortly after being made Prime Minister, Mr Burnham said the personal allowance had repeatedly come up on the doorstep during the Makerfield by-election.
He said: "I heard issues related to the personal allowance more than anything on doorsteps in Makerfield. I think it's been frozen now, hasn't it for a number of years, so it has dragged more people in - pensioners, I think - and that particularly I think has become a growing issue."
Mr Burnham suggested that he wanted his new Chancellor - expected to be appointed later on Monday - to look at lifting the introductory rate at the Budget later this year.
"So all of this will be looked at though at the Budget, and obviously it's difficult given the financial circumstances in which we find ourselves", he said.
“But I wanted to recognise the point because it's challenging for people and it's people on the lowest incomes perhaps who've most been affected by that."
The 50p top rate of tax was abolished by the Tory Government in 2013.
However asked directly of he was looking a new 50p top rate of income tax he said: “I think that would be just premature to say that. I’ve barely got my feet under the table.”
The Prime Minister had previously hinted during his campaign for the Makerfield seat that he wanted to review the tax burden on working people, saying the personal allowance was an issue raised repeatedly by voters.
But any move to cut income tax would come with a major financial challenge, with the Government facing pressure to balance promises on living costs with its wider spending commitments.
The 50p top rate of tax was abolished by the coalition government in 2013, leaving the highest rate of income tax at 45p.
Asked directly if he was considering bringing back the 50p top rate of income tax, Mr Burnham said: “I think that would be just premature to say that. I’ve barely got my feet under the table.”
The comments will fuel speculation over the direction of Mr Burnham’s first Budget, with tax changes expected to be among the biggest tests facing his new administration.
