Would Andy Burnham raise your tax-free allowance? Calculator
As his first cost-of-living move, the new PM says he is "looking at" unfreezing the £12,570 income tax personal allowance — frozen since 2021 — for the first time in five years. Nothing is confirmed. Here's the number being talked about, and what it would mean for you.
What's being proposed
The personal allowance — the amount you can earn before paying any income tax — has been frozen at £12,570 since 2021, with the freeze currently running to 2030/31. In his first hours as Prime Minister, Andy Burnham said the frozen threshold was "the thing I heard the most on the doorsteps" during his Makerfield by-election campaign, and confirmed he is "looking at" raising it as part of a cost-of-living package first set out on 21 July 2026, his first full day in No.10.
No figure has been confirmed. Reports have floated a CPI-linked rise of roughly £480 — based on the September 2025 inflation figure of 3.8% — which would take the allowance to about £13,050. That's the scenario this calculator models; treat it as an illustration of the scale being discussed, not a government commitment.
Where it comes from
Threshold freezes are a stealth tax: as wages rise, more income gets pulled into tax and into higher bands even though rates haven't changed — a process explained in our fiscal drag glossary entry. Burnham has signalled this is his top cost-of-living priority, alongside rent controls, energy bill support and a possible bus fare cap — all still being finalised at the time of writing. Estimates put the cost of even a partial unfreezing at billions of pounds a year, adding to the pressure on Chancellor John Healey's first Budget this autumn.
The case for and against
Supporters argue
- It directly answers the cost-of-living pressure Burnham says voters raised with him most.
- Unlike a headline rate cut, a bigger allowance benefits people on lower and middle incomes proportionally more.
- It partially reverses years of fiscal drag dragging more people into tax.
Critics argue
- It costs billions at a time when the Treasury is already stretched, and needs funding from somewhere.
- People already earning below £12,570 pay no income tax today and would gain nothing.
- At the scale being discussed, the saving is modest in cash terms — around £96 a year at the basic rate.
- Nothing is confirmed; it could be scaled back or dropped entirely before the Autumn Budget.
What would you save?
Enter your gross annual income to compare today's income tax with the tax you'd pay if the personal allowance rose to £13,050.
Your income
The threshold
Income tax is modelled on 2026/27 UK rates (England, Wales & NI): personal allowance £12,570 (tapered above £100,000), 20% to £50,270, 40% to £125,140, 45% above. The proposed scenario raises the allowance to £13,050 — a CPI-linked estimate, not a confirmed figure — with all other thresholds unchanged. National Insurance and Scottish income tax rates are not modelled. Not financial advice.
See where you stand
- Income tax calculator — your full 2026/27 tax, NI and take-home pay.
- Reform's £20,000 allowance — a far bigger threshold change, compared.
- Andy Burnham confirmed as Prime Minister — the full policy picture.
Sources & further reading
- Yahoo Finance UK — how much extra money Britons could get.
- AOL UK — Burnham signals the £12,570 threshold may rise.
- Left Foot Forward — Burnham considers rent controls and raising the threshold.
- ITV News — Burnham's first speech as Prime Minister.
This is a fast-moving story; figures reflect reporting as of 21 July 2026 and may change once the package is confirmed. Not financial, legal or tax advice.
Frequently asked questions
Is Andy Burnham raising the personal allowance?
Not confirmed. Burnham has said he is "looking at" unfreezing the £12,570 income tax personal allowance as part of a cost-of-living package first set out on 21 July 2026, his first full day as Prime Minister. He has called it "difficult" given the fiscal backdrop and stressed no final decision has been made.
How much would the personal allowance rise by?
Reports suggest a CPI-linked increase of roughly £480, taking the allowance from £12,570 to about £13,050 — based on the September 2025 inflation figure of 3.8%. This is an estimate, not a confirmed government figure.
How much would I save?
At the 20% basic rate, an extra £480 of tax-free allowance is worth about £96 a year to anyone earning above the new threshold. Enter your salary in the calculator for your exact figure, including what happens if you're a higher-rate taxpayer.
Why has the personal allowance been frozen?
The personal allowance and other income tax thresholds have been frozen since 2021, dragging more people into tax and higher tax bands as wages rise — a process called fiscal drag. The freeze currently runs to 2030/31. Any rise Burnham announces would be a partial reversal, not the end of the freeze.
When will this be confirmed?
Burnham's first cost-of-living measures were due on 21 July 2026, alongside options on rent controls, energy bills and bus fares. Any tax threshold change would still need to be confirmed at Chancellor John Healey's first Budget this autumn.