Budget Report
2007
Tax
• Corporation tax will be cut from 30p to 28p from April 2008.
• However, the small companies rate will be raised in three
stages, from 20p this year to 22p in 2009.
• The basic rate of income tax will fall from 22p to 20p from
April next year.
• The temporary 50% rate of first-year capital allowances
for small enterprises will be extended for a further 12 months.
• From 2008-09, subject to state aid approval, the enhanced
deduction available to SMEs in respect of qualifying research and
development expenditure will increase from 150% to 175%.
• The top-rate income tax threshold will rise to £43,000
from April 2009.
• Tax exemption for capital gains will rise from £8,800
to £9,200, and will be £18,400 for married couples.
• Inheritance tax threshold will rise from £285,000
to £350,000 in 2010.
• VAT on anti-smoking nicotine patches and gum reduced from
17.5% to 5%, from 1st July, coinciding with the introduction of
the smoking ban.
• The 10% band of income tax, currently payable on £2,230
of income will be abolished.
• The landfill tax will rise by £8 each year from April
2008.
• Putting VAT on flights has been ruled out.
Investment and employment
• Small companies taking on employees needing to acquire the
most basic of skills will be offered between £2,000 and £3,000
training assistance per employee, between now and 2011.
• Employment has rise, with 220,000 more men and women in
work.
• Over the past year, investment has grown by 6%, business
investment by 7%, and inward investment by 10%.
• Business investment is forecast to rise again by more than
7% this year.
• In 2008, Britain’s’ growth will be the highest
in the G7, between 2.5 and 3%.
Employment tribunals
• Proposals to streamline the way employment disputes are
resolved, with the aim of simplifying the current tribunal system
and reducing costs for employers, by applying risk-based approach
to legislation.
Environmental policies
• Until 2012, all new zero carbon homes up to £500,000
will be exempt from stamp duty.
• Landfill tax will rise by £8 each year from April
2008.
• £800million will be invested in the Environmental
Transformation Fun, jointly run by the international development
and environment secretaries.
• Increasing funds available through the Low Carbon Buildings
Programme to a total of over £18million to help meet the demand
from households for microgeneration technologies.
• Rise in climate change levy rates from 1st April 2008 in
line with current inflation.
Fuel Duty
• Fuel duty has been increased, set at 2p for 2008, and 1.8p
for 2009.
• Road tax on highest-polluting vehicles up to £400
from April next year, while duty for vehicles in the lowest pollution
band will fall from £50 to £35.
• Duty on heavily polluting vehicles will rise to £300
from £210 in 2007 and again to £400 in 2008.
Savings
• From next April, the cash ISA limit will increase to £3,600.
Property
• Business rate relief on empty commercial property will reduce
to ensure the better use of commercial premises.
Pensioners
• Tax-free allowance for pensioners under 75 will rise in
three stages from “7,280 to £9,770 in 2011. For over-75s,
the tax free allowance will rise annually from £7,420 to £10,000
by 2011.
• Grants of £300 to £4,000 will be available for
pensioners installing insulation and central heating in their homes.
Pensions
• The 125,000 people who lost their pensions due to company
insolvency will get help with a financial assistance scheme increased
from £2billion to £8billion.
Public Spending
• Government spending will rise to £674billion by 2010-11.
• Investment in schools, hospitals, security and defence will
rise from £43billion to £60billion by 2012.
• An extra £400million will be allocated to the Ministry
of Defence.
• Investment in the NHS in England will rise by £8billion.
• Public investment in science will rise from £5billion
to £6.3billion, by 2011.
Families and benefits
• Child benefit, for a first child, will rise from £17.45
a week to £20 a week, by 2010.
• 50,000 16 to 17-year olds who sign activity and learning
agreements will receive a training wage in return for gaining skills.
• More than £1billion towards raising value of working
tax credit, so minimum wage for the parent in full-time work with
one child will rise to £7.70.
• The $40 a week in-work bonus paid to line parents for their
first 12 months in work will be extended.
• Minimum payment for families on child benefit and child
tax credit will increase from £575 a year to £1,600
a year.
• Help for poorest children increases to £75 a week.
• Families with two children start paying income tax when
earning more than £24,250 in April 2009, up from the current
£22,500.
• Extended access to free childcare.
Excise duties
From midnight, Sunday the 25th March:
• Beer will rise by 1p a pint.
• Cider increases 1p a litre.
• Wine is up by 5p a bottle and sparkling wine be 7p.
• Duty on spirits will be frozen.
• Cigarettes will rise by 11p a packet.
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