Mail request: Comments wanted on the rumoured change to the personal allowance in the upcoming Budget

A pay rise that only keeps pace with living costs can still leave you paying a larger share of your income in tax when the personal allowance is frozen. That is why people can earn more on paper without feeling better off.

As a small business owner, I would welcome employees keeping more of what they earn. A £3,000 allowance increase could mean £600 a year, or £50 a month, for someone whose full additional allowance would otherwise be taxed at 20%, assuming other rules stay unchanged. That is meaningful help with household bills.

But this remains a rumour. People should not build it into their budgets, and the full package matters: what other taxes or thresholds might change alongside it?

I would welcome the increase, but whether the government will deliver it is a separate question.

Enabling people to keep more of what they earn will give some relief to the cost of living, so it would no doubt be popular. It does nothing to tackle the underlying cost of living, it just reduces one burden on earners. The question is though, how would it be funded as there are more and more demands for government spending and so either cuts or spending restraint would be needed to balance the books.

There's a mortgage angle here that often gets missed. Affordability is assessed on your take-home pay and your monthly commitments, so anything that changes net income feeds directly into how much you can borrow and how comfortable the payments feel. The frozen allowance since 2021 has been a stealth squeeze: as wages rose, more pay was pulled into tax, so take-home never kept pace with headline rises, and that eroded borrowing power even while rates did their own thing. Raising it to £15,570 partly reverses that. At around £50 a month it won't transform what anyone can borrow, but it moves in the right direction: it eases the monthly-payment squeeze that has been the real brake on the market, and unlike a rate cut it's certain money in your pocket. For first-time buyers stretched on affordability, every bit of net-income relief counts. I'd treat it as a rumour until it's delivered, and it's an expensive one, but if it lands it's a welcome help at the margin.

Freezing the personal allowance year after year has been deeply unfair. People should not be dragged into paying more tax simply because their wages have risen with inflation. Successive governments have become far too reliant on the stealth tax of fiscal drag.

Raising the allowance from £12,570 to £15,570 would therefore be welcome and could save a basic-rate taxpayer around £600 a year. But the big question is how it would be funded. If reports of a significant rise in Capital Gains Tax prove correct, we risk a fiscal own goal, with experts already warning that the overall package could be negative for growth.

Britain risks becoming trapped in a cycle of sluggish growth, rising debt and ever-higher taxes on an increasingly narrow group of taxpayers. Sustainable tax cuts ultimately need to come from stronger growth and disciplined public spending, not simply shifting the tax burden elsewhere.

A frozen allowance is a silent squeeze. More of what people earn gets taxed, even when a pay rise only keeps up with prices, and it creeps up so slowly that many blame themselves instead. They think they're bad with money. Scarcity research suggests money pressure eats mental bandwidth, crowding out the space to think clearly. A rise would ease pockets, but the bigger boost might be feeling the system is finally on your side.

The frozen personal allowance has been one of the most effective stealth taxes in modern memory. As wages rose with inflation, millions were dragged into paying income tax, or into higher bands, without a single rate going up. In effect, a pay cut by the back door.

A rise to £15,570 would be worth up to £600 a year, a meaningful boost, especially for lower earners, who are more likely to spend it. There is a practical driver too: the triple lock is pushing the full state pension towards the current threshold, potentially leaving some pensioners paying tax on their only income.

But it won't come cheap. With the public finances this stretched, the Treasury will want the money back elsewhere, perhaps by trimming the basic rate band, as in the early 2010s. Expect some of what is given with one hand to be taken back with the other.

Freezing the personal allowance has been one of the quietest tax rises households have faced. Wages rise, often just to keep pace with inflation, while the threshold stays still, dragging more income into tax.

If the allowance rose from £12,570 to £15,570, a basic-rate taxpayer able to use the full increase could save around £600 a year in income tax, roughly £50 a month. For households still absorbing higher food, energy, mortgage and rent costs, that is meaningful money.

But I would treat this as speculation until it is announced. Increasing the allowance would put money directly back into millions of pay packets, but it would also cost the Treasury significant revenue. In the current fiscal climate, the real question is not whether households would welcome it, they absolutely would, but what the Chancellor would do elsewhere to pay for it.

The £12,570 personal allowance freeze since 2021 is a huge engine of fiscal drag. Inflation and pay growth have pushed millions into higher tax bands with no gain in spending power. Basic-rate workers pay roughly £600 a year more than if thresholds had tracked inflation, while pensioners are dragged into tax by Triple Lock increases. Lifting the threshold to £15,570 would hand basic-rate taxpayers £3,000 of extra tax-free income putting cash straight into low- and middle-income pockets to stimulate spending. Economically, it's unlikely: unfreezing thresholds costs the Treasury over £15bn. Politically, it's highly likely if Burnham fancies an early election to win his own mandate. Proponents would fund it via higher CGT or ending interest on bank reserves. Both would be another nail in the coffin of British business. The Laffer Curve is the warning: push rates too high and behaviour changes, the tax base shrinks and revenues fall.

Lifting the threshold to £15,570 still leaves it short of where it would have been without the freeze, which shows how much has been taken from workers since 2021. And this is the same Government that extended the freeze less than a year ago. Five years of pay rises that barely kept up with prices have dragged more of people's income into tax, and the lowest earners have felt it most. With the public finances as shocking as they are, expect it to be phased in over years rather than handed over in one go.