Should we hike the income tax-free allowance to £15,000?
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What is the main topic discussed in this episode?
Welcome to This Is Money Podcast, sponsored by Trading212. Download the Trading 212 app today and open a cash license with promo code TIM to get the 12-month bonus promo rate of 5.01%. Terms apply. I'm Georgie Frost and joining me and Simon Lambert today is Helen Crane. And coming up, could we be in line for a boost in our pay packets? The speculation Labour is planning to raise the personal. Allowance in the budget, but will they? And if so, how would we pay for it? Also, today, how the heck did the UK's energy costs get so high? Can you still make a profit from buy to let? Yes, but only if you hit this magic number. We talk Airbnb privacy and Simon rage baits me, sending me a piece on working from home.
But are we slackers really ruining it for everybody else? Don't forget you're staying up to date with all the latest break. Money news, just go to thisismoney.co.uk or download the app. But first, Simon, 5.01%. That is the biggest figure I've read out of the top there. Is that right?
It is right. And there is another cash ISA battle going on. Uh, and this is the trading two on two rate has moved up really substantially. Anybody listening to this podcast, paying attention to the start of it each week, will have noticed this. This is the highest rate since way earlier in in 2025. It reflects what's going on in terms of interest rate expectations and what's going on in the bond market. But after we talked about how bad the big banks are at passing on higher rates to savers and how many people are sitting on legacy low rates or insult accounts, as we like to call them on the This Is Money podcast. This is you know, in stark contrast to this and it is an illustration of why you need to check your savings rates and move to a better rate.
And meanwhile, the speculation continues a pace ahead of next month's budget this week. CGT was making the headlines, but also the threshold at which people start paying income tax. Now, the government is said to be considering upping the income threshold at which earners start paying tax from £12,570 to £15,570.
What is the personal allowance and why is a rise to £15,570 being discussed?
Now it's been stuck at that £12,000. Figure since around 2021 and will remain there until 2031, unless. It doesn't. But will it really happen? And if so, how the heck are we gonna pay for it? So Helen, Simon, welcome. Helen, the personal allowance, just uh reminders, what is it? Who gets it? Why is it even there?
Sure. So this is the sort of baseline amount under which you don't pay any tax. At the moment, as it stands, if you earn less than twelve thousand five hundred and seventy pounds in a year, then you don't pay any tax on your income. Uh obviously lower earners, people who perhaps work part time, pensioners, yeah, who uh only rely Around the state pension may not have to pay any tax on their earnings if they don't go above that level. Once you earn more than that, income tax kicks in and then goes up in different increments. So once you qualify for paying tax, it's 20% between £12,571 and £50,270 above. that the higher rate of income tax comes in which is 40% and that's on earnings up to 125,140 pounds.
And then anything above that is taxed at 45% and you're known as an additional rate taxpayer. So it it it depends on band. Your your salary or or your income is essentially uh taxed in slices. So even if you fall into the higher rate band is only on the amount of your salary that goes above the higher rate level. Yeah, it's it's been in place, uh it's been frozen at this level for quite some time. So this rumour that's come out this week that it might be changed and changed quite significantly could be quite a big deal.
So just to be clear, this is a bump to the personal allowance. This wouldn't be any unfreezing of the bands or anything like that. It's just I mean, it gets us around that whole state pension brew ha ha that we talked about a couple of weeks ago, doesn't it?
Yes, exactly. So this would be effectively uh raising the personal allowance. So essentially the the band under which you don't pay any tax to fifteen thousand five hundred and seventy pounds.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:03–2:16
2
What is the personal allowance and why is a rise to £15,570 being discussed?
2:16–10:41
3
How could Britain reform its tax system to fund a higher personal allowance?
10:41–15:24
4
Why are UK energy bills so high compared to other G7 countries?
15:24–21:52
5
What is the story behind Airtel Money’s London listing and why does it matter?
21:52–25:12
6
Can landlords still make a profit from buy‑to‑let properties in today’s market?
25:12–29:31
7
Are indoor Airbnb cameras legal and what should guests do if they find one?
29:31–33:42
8
Is it time to return to the office or keep working from home?
33:42–46:46
Speakers
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