Personal allowance change could affect Solihull workers and pensioners

People across Solihull could be affected by a possible change to the amount they can earn before paying income tax

NEWS

Lance Clinton

9/23/20261 min read

Workers and pensioners across Solihull could be affected by a possible change to the personal allowance being considered by the Government.

The personal allowance is currently £12,570, meaning most people do not pay income tax on earnings below that amount.

The threshold has been frozen since 2021, but reports suggest the Government is considering increasing it to £15,570.

That would mean an extra £3,000 of income could be earned before income tax starts to apply.

What would it mean for people in Solihull?

For someone earning between £12,570 and £15,570, an increase in the allowance could mean paying less income tax.

People earning more than £15,570 could also pay less tax because a larger part of their income would fall within the tax-free allowance.

The amount someone actually saves would depend on their income and individual circumstances.

The proposal could also have an impact on pensioners.

The state pension is expected to rise above the current £12,570 personal allowance, which could leave some pensioners paying income tax if they have no other income.

Increasing the allowance to £15,570 could change that for some people.

Why is the allowance being discussed?

The £12,570 threshold has stayed the same for several years, despite wages increasing.

That has meant more people have gradually been brought into income tax as their earnings rise.

The Institute for Fiscal Studies has previously highlighted this effect, known as fiscal drag.

Reports this week suggest raising the allowance could now be one of the options being considered by the Government.

However, nothing has been confirmed yet.

The Treasury has not announced a change to the personal allowance, meaning the current £12,570 threshold remains in place.

Any change would have to be formally announced by the Chancellor.

For now, people in Solihull should continue to use £12,570 as the current personal allowance, with £15,570 being the figure reported as under consideration.