Tax Allowance Hike Could Boost Millions by £3,000

Millions of workers could see their tax bills reduced by up to £3,000 if proposals to raise the personal allowance are implemented. Labour donor Dale Vince has suggested that the government increase the threshold from £12,570 to £15,570, which would put more income beyond the scope of income tax.

Vince claims that this could be funded by changing the way interest is paid on commercial bank reserves held at the Bank of England, which amounts to around £30 billion a year. He suggests ending these payments and using the saved funds to restore the personal allowance freeze, potentially generating an extra 1.2% GDP growth in the first year.

However, former Conservative Treasury minister Sir David Gauke has expressed skepticism about Vince's proposal, arguing that raising such large sums from the banking sector could have significant economic consequences and competitiveness impacts.