For the first time in 14 years, the Government is proposing an increase to the Personal Tax-Free Allowance (PTFA). Since its introduction in 2012, the allowance has remained frozen at £7,000, even as the cost of living has steadily risen year on year. When tax allowances stay frozen while prices increase, your spending power is eroded.
Our policy intention is to limit the impact of cost-of-living increases. We know this change is not as much as many people had hoped for.
How We Got to £7,150
Inflation in the last quarter of 2025 was 2.2%. To prevent further erosion of living standards, the Government has proposed raising the PTFA from £7,000 to £7,150; a modest but meaningful increase aligned with inflation. This uplift is not a short-term “perk”; it is a correction to ensure the real value of the tax allowance is maintained. It also signals a significant shift in approach: instead of allowing thresholds to stagnate for a decade.
Why Not £7,500 or £10,000?
Government explored more than 20 models, including increases to £7,500 and £10,000. But choices must be affordable.
Financial impacts in 2026/27:
- £7,000 → £7,150: £90,000
- £7,000 → £7,500: £290,000
- £7,000 → £10,000: £1,530,000
Increasing to £7,500 immediately would require cutting essential services like public transport or abandoning new initiatives like the planned child benefit scheme.
Increasing to £10,000 would be unaffordable without significant reductions to frontline services, something this Government refuses to do.
Why £7,150 is the Responsible Choice?
The proposed increase:
- protects households against inflation
- is affordable without cuts to health, education or social support
- sets the foundation for annual adjustments, not once-a-decade jumps
- allows Government to proceed with wider reforms supporting working families
This is part of a balanced cost-of-living package, not a one-off measure.
How the Personal Allowance Fits with Other Measures
Government is developing multiple measures designed to support those most affected by rising costs of which the tax-free allowance increase is a small part.
1. Personal Tax-Free Allowance Increase
Keeps more income in the pockets of working people, particularly those on low or middle wages.
2. Proposed Minimum Wage Increase
Minimum wage has been reviewed for 2026. The Employment Rights Committee recommendation is a rise of 35p per hour, bringing the minimum wage to £4.85. This delivers immediate, direct benefits as listed in the table below:
| Scenario | Benefit |
| Adult on minimum wage (40 hrs/week) | £577.72 |
| 2 adults on minimum wage | £1,155.44 |
| Part-time worker (20 hrs/week) | £364 |
These increases alone will meaningfully improve disposable income for the lowest‑paid.
3. Child Benefit Scheme
Government is working on the introduction of a Child Credit / Child Benefit Scheme during the next financial year. While figures cannot yet be published, the intention is to provide substantial, recurring support for young families.
This is key to Government’s wider demographic strategy: Supporting young families today strengthens St Helena’s future tomorrow.
4. Will the workload to do this cost more than the increase?
No. The proposed uplift is a simple numerical change, not a restructure of the tax system. It is intentionally modest to avoid additional administrative complexity or staffing demands within both the public and private sector.
5. Why This Matters for St Helena’s Future?
This is about more than tax thresholds. It is about:
- making sure work pays
- giving families breathing room
- keeping young people on island
- addressing St Helena’s ageing demographic
- strengthening the workforce of the future
By protecting income, supporting families and ensuring stable public finances, Government is building a fairer and more sustainable St Helena.
This package is designed for:
- working people
- young families
- low-income earners
- those struggling with rising prices
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