Income tax allowance: Burnham refuses immediate change, citing financial difficulty

Andy Burnham has ruled out any immediate change to the frozen income tax personal allowance, saying the government cannot afford it despite widespread frustration. The £12,570 threshold has been frozen since 2021, dragging more people into paying tax as wages rise. The prime minister told the Times over the weekend that the “frustration about the personal allowance” he heard during the Makerfield by-election was “lodged in my mind”. But speaking on Wednesday, he insisted: “There is no commitment at this point to change, but we will look at that at the Budget.” Burnham had already warned on Monday that any change would be expensive and “difficult given the financial circumstances in which we find ourselves”. That message was reinforced by his team, who told the BBC that changes to the personal allowance are not part of his initial plan to tackle the cost of living. The Institute for Fiscal Studies has estimated that unfreezing the threshold could cost up to £9bn a year. Any increase in the allowance would also be complicated by Labour’s 2024 manifesto promise not to raise the basic, higher or additional rates of income tax, meaning the money cannot be recouped from top earners. At his first cabinet meeting, Burnham told ministers: “We’ve got to show fiscal discipline. We’ve got to show that our commitment to the fiscal rules is real and we’re prepared to make difficult decisions in relation to that.” He has pledged to lead a “cost of living government” and said ministers should be “prepared to reprioritise”. The prime minister defended his candour on the issue, saying: “I want to answer questions honestly in this job, as I said before. I think that’s all about trust in politics and doing politics differently.” Whether the Budget will bring relief for millions trapped by the frozen threshold remains an open question, with Burnham offering only a promise to “look at it”.