The idea of raising the personal allowance to £15,570 came from a proposal by Labour donor Dale Vince, according to Brit Brief, citing the Telegraph. City AM had already reported that the Chancellor, John Healey, was considering a rise of that size.
Brit Brief says the Telegraph reports that the Government is considering the change, to be paid for by a capital gains tax rise and by ending Bank of England interest payments on commercial bank reserves. This is a second-hand account of the Telegraph's report and has not been independently checked. It also conflicts with other reports that a capital gains tax rise has been ruled out.
Brit Brief says Dale Vince has donated £6m to Labour since 2013 through Ecotricity.
The allowance has been frozen at £12,570 since 2021 and is set to stay there until 2031. Charlene Young, senior pensions and savings expert at AJ Bell, cites HMRC estimates that each £100 rise costs about £1bn a year on average, so a £500 rise would cost about £5bn. That figure has not been checked against HMRC.
AJ Bell's analysis says the allowance would be worth about £16,072 in 2026/27 had it kept pace with inflation. On that measure, a rise to £15,570 would still leave it below its inflation-adjusted level.
"The more it's hiked, the bigger the potential tax saving, and the bigger the fiscal hole Healey needs to fill."
Healey delivers the Budget on Wednesday 28 October.