Tax-Free Allowance Reform
Reform UK Proposes Raising Tax-Free Allowance to £15,000 in First 100 Days
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Key Points
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Marriage Allowance is generally available only when the lower earner has income below the Personal Allowance and the higher earner is a basic-rate taxpayer; transferring the allowance can reduce the lower earner’s own tax-free threshold to £11,310.
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HMRC’s example shows that transferring £1,260 can reduce a couple’s combined taxable income from £7,430 to £6,360, producing a £214 saving in that particular case rather than the maximum £252.
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Robert Jenrick said he would resign if the £15,000 allowance was not delivered in Reform’s first budget: “If I don’t deliver this exactly when I have said that I will, I will resign. No ifs, not buts, I will be gone.”
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Reform estimates the cost of raising the allowance would increase from £17.7 billion in the first year to £21 billion by the fifth year, with the party proposing to fund it through a wider £80 billion programme of public-spending cuts.
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Reform says the freeze has pushed 1.3 million people into paying tax in the past year, while Jenrick argues it costs a full-time worker on the minimum wage more than £750 annually and could result in the state pension being taxed for the first time.
Reform UK plans to raise the tax-free Personal Allowance from £12,570 to £15,000 within its first 100 days in government, according to London Insider. The move would save most taxpayers about £500 annually and remove 2.9 million people from income tax altogether. The proposal comes as the current allowance has been frozen since 2021 and is scheduled to remain frozen until at least 2031, pushing more workers into tax through wage growth alone.
Reform estimates the policy would cost £17.7 billion in its first year, funded through proposed public-spending cuts across government. Party leadership candidate Robert Jenrick said he would resign if the allowance is not raised to £15,000 in Reform's first budget, iNews reported. Prime Minister Andy Burnham has acknowledged concerns about the freeze but has not committed to changing it before the Budget.
The Freeze That's Quietly Raising Taxes
The Personal Allowance has been frozen at £12,570 since 2021. As wages and pensions rise with inflation, more income crosses this unchanged threshold and gets taxed. This process, called fiscal drag, raises tax receipts without Parliament formally changing tax rates. According to iNews, the freeze is scheduled to continue until 2031, meaning the effect will compound over the decade.
Reform estimates that the freeze has already pushed 1.3 million people into paying tax in the past year alone. A full-time worker on minimum wage loses more than £750 annually to this frozen allowance, according to Jenrick's analysis. The freeze could also mean the state pension will be taxed for the first time, London Insider reported.
How Marriage Allowance Shows the Limits of Tax Cuts
Married couples and civil partners can currently transfer up to £1,260 of unused allowance to a higher-earning spouse, as long as the lower earner stays below the threshold and the higher earner pays basic-rate tax. This can save up to £252 per year and claims can go back up to four previous tax years. However, the transfer reduces the lower earner's own tax-free threshold to £11,310, making the benefit household-specific rather than universal.
HMRC's example shows that transferring £1,260 can reduce a couple's combined taxable income from £7,430 to £6,360, producing a £214 saving in that particular case, Express noted. A broader Personal Allowance increase would help every individual equally, but it would also carry a much larger price tag for government.
Reform's Funding Plan: £80 Billion in Spending Cuts
Reform says raising the allowance to £15,000 would cost £17.7 billion in its first year, rising to £21 billion by year five. The party proposes to fund this through a wider £80 billion programme of public-spending cuts across government departments. This makes the credibility of the tax cut dependent entirely on whether such cuts are politically and practically possible.
Reform's longer-term ambition is reportedly to raise the allowance further to £20,000, according to iNews. The party has made the £15,000 target a central pledge for the next general election. Robert Jenrick's commitment to resign if the policy is not delivered in the first budget underscores how central this promise is to Reform's electoral pitch.
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