Unfreeze the threshold
Unfreeze tax thresholds | Fair tax now
Put more money in people’s pockets
The country is facing a critical cost of living crisis that combines the double whammy of rising prices with falling household incomes.
And one of the factors impacting income has been the freezing of tax thresholds. Since 2022 successive governments have frozen the personal allowance. As inflation has soared people are paying more tax.
The personal allowance threshold has been fixed at £12,570
And the 40% higher rate threshold has been frozen at £50,270
Without the freeze the personal allowance would be £3,500 higher, and on top of that an increasingly number of ordinary workers – nurses, teachers, tanker drivers etc – are being dragged into the 40% higher rate band.
Independent polling shows that a majority of people support increasing the personal allowance and ending the freeze.
“Unite is calling for the government to raise tax thresholds to put much needed money back in hard-working people’s pockets.” Sharon Graham, general secretary
What Unite is calling for ↓
Unite is calling for the government to undo the freezes since 2024 when Labour came to power. That would:
Restore the tax free personal allowance to just under £14,000
Restore the 40% threshold to £55,000.
What is the cost of the changes?
No changes come without a cost, and this is expected to be approximately £16 billion in the next financial year.
How can the cost of unfreezing the allowances be paid?
The funds for unfreezing the allowance should come not from more debt, but from taxing wealth and profits. The following sums could be generated by some simple actions:
£25 billion from a wealth tax on society’s richest | Tax the top 1% at a rate of 1%
£12 billion by equalising capital gains tax with income tax | End the tax break to landlords and others by ending the cap on capital gains on investment of 24% and matching it to the top rate of income tax at 45%
£10.5 billion from corporation tax | Raise the corporation tax rate from 25% back to its 2010 level of 28%
£10.2 billion by adding national insurance to investment income | Workers currently pay national insurance on wages, but investors pay nothing on investment income
What are the benefits?
By undoing the freezes since 2024 workers will see a gain of some £232 each.
Low income workers would be taken out of the tax band altogether
More average paid workers would be taken out of the 40% tax band
Experienced nurses, teachers and other skilled workers could gain over £500
More money in workers’ pockets would drive growth and VAT receipts
Household disposable income will rise and people will spend more