Healey urged to ‘restore faith’ by ending personal allowance freeze in Budget

UK savers are demanding Chancellor John Healey end the personal allowance freeze in his first Autumn Budget, as more Brits find themselves in higher tax bands due to the freeze. A recent poll indicated nearly 70% of taxpayers want Healey to unfreeze the personal allowance, citing its impact on workers and pensioners. The freeze has led to an estimated 40% increase in tax paid by retirees, rising from £21.1bn to £29.8bn in just two years, according to HMRC.

The personal allowance has been frozen at £12,570 since April 2021, with previous Chancellor Rachel Reeves initially pledging not to extend it beyond April 2028. However, in the November 2025 Budget, she changed her stance, confirming the threshold would remain frozen until April 2031. This has resulted in a greater number of higher rate taxpayers, with 6.6 million in the last financial year, driving up the cost of tax relief on pensions.

Becky O'Connor, head of pensions at Pension Bee, emphasized the need for transparency, stating that Healey faces a low-trust starting point regarding pensions. A clear signal on the tax-free lump sum, she suggested, would cost nothing and could significantly restore trust. Over 40% of respondents called for Healey to immediately overhaul Reeves' decision, while one in five admitted to not knowing what the personal allowance is, highlighting the gap in public understanding.

The debate over pension tax has outpaced public knowledge, leaving many Brits vulnerable to unexpected taxes. Additionally, calls have been made to scrap the inheritance tax overhaul, as pensions will now be included in the scope of IHT, affecting unused funds and death benefits in estate taxes. With the Autumn Budget approaching, both savers and pensioners are increasingly anxious about the government's treatment of their retirement savings, with almost 60% lacking confidence in the government's ability to protect their retirement funds.