Robert Jenrick has pledged to raise the tax-free personal allowance from £12,570 to £15,000 in his first budget as Chancellor if Reform UK is elected into government.
In a speech on Saturday, Jenrick will say that the £21bn tax cut would show the party’s mission to “choose the worker”.
He will add that Reform would push to go “step-by-step” to raise the personal allowance to £20,000 when it can be paid for in full, drawing on the party’s last manifesto pledge.
“There has never, in our lifetimes, been a worse time to be a worker in Britain,” Jenrick will say,” Jenrick is to tell an audience of party members.
“The hard choice for Burnham and for us is exactly the same. It’s either welfare waste, foreign aid and migrants — or the British worker. We choose the worker.”
The proposal builds on Reform’s economic policy agenda as Jenrick said at a fringe event that he would prioritise tax cuts for workers over other areas of the UK economy.
Jenrick’s biggest tax cut proposal yet
The pledge will be funded from planned £80bn cuts to government spending, of which £52bn would come through welfare reform.
Party officials say that the tax cut would save the majority of taxpayers about £500 a year and benefit 40m people overall.
The tax-free personal allowance is tapered off for people on earnings between £100,000 and £125,000, creating the so-called “tax trap” for high earners.
The personal allowance has remained frozen for five years at £12,570 under successive Tory and Labour governments as part of a bid to raise substantial sums of revenue. It has created what economists call “fiscal drag”, which is where taxpayers pay a higher percentage of their income into government coffers as wages and prices rise over time with no changes to the tax bracket.
Analysis by the Taxpayers’ Alliance shows that around 500,000 more people will pay the basic rate of tax this year while 410,000 more people would fall under the higher tax rate of 40 per cent due to wage growth.
Rachel Reeves announced last year she would freeze the stealth tax at £12,570 until April 2031 despite saying tax bands would rise with inflation in the middle of the government’s five-year term in her first budget in 2024.
Prior to entering Number 10, Andy Burnham hinted he wanted to unfreeze the personal tax-free allowance although he later reneged on the idea due to the high costs to the government.
