Economy
Inflation The consumer price index is forecast to fall to 2 per cent
this year, from 2.8 per cent, and to remain at 2 per cent in 2008 and 2009.
Growth GDP is forecast to grow by 2.75-3.25 per cent this year and by
2.5-3 per cent in 2008 and 2009.
Public spending Set to rise by 3.1 per cent in 2007-08, by 2 per cent
in 2008-09, by 1.9 per cent in 2009-10, by 1.8 per cent in 2010-11 and by 2
per cent in 2011-12.
Net borrowing Expected to be £34 billion in 2007-08, £30 billion in
2008-09, £28 billion in 2009-10 and £26 billion in 2010-11.
Personal taxes
Income tax The basic rate of income tax will be cut by 2p to 20p from
April 2008, its lowest rate in 75 years.
Capital gains tax The annual exempt amount for capital gains tax will
rise from £8,800 to £9,200 next year.
Inheritance tax Threshold will raised from £285,000 to £350,000 by
2010.
Rubbish tax David Miliband is to announce a tax on rubbish that will be
worth up to £10 a month.
Family and investment
Child benefit Pledge to lift 200,000 young people from poverty with
increases in child benefit, which will rise from £17.45 to £20 a week for
the first child by 2010.
Lone parents The £40-a-week bonus for lone parents in their first six
months of employment will be extended to the first 12 months. Access to free
child care will be extended.
Nursery Free nursery education is to be increased from 12.5 hours to 15
hours a week.
Granny flats VAT cut from 17.5 per cent to 5 per cent on home
conversions for elderly relatives
Childline Increased funds for childline and parentline, aimed at
establishing an average of six children’s centres in each constituency.
Individual savings accounts (Isas) The annual amount people will be
able to put into a cash Isa will go up from £3,000 to £3,600 in April 2008.
The total sum that can be saved through Isas (including stock and share
Isas) will be increased to £7,200 each year.
Excise duties
Alcohol Duty on beer to rise 1p a pint; wine 5p a bottle, cider 1p per
litre, sparkling wine 7p a litre from midnight on Sunday. Duty on spirits
has been frozen for the tenth consecutive budget.
Tobacco11p of duty was added to a pack of 20 cigarettes, from 6pm
yesterday. VAT on nicotine replacement therapies, such as patches, to be cut
from 17.5 per cent to 5 per cent for one year from July 1.
Vehicle excise duty Road tax on gas-guzzling cars will jump to £300
this year and £400 in April next year. The rise affects only band G
vehicles. Duty on the most fuel-efficient cars will drop from £50 to £35.
Road fuel Drivers will face increased pressure on petrol prices, with
duty on fuel set to rise by 2p a litre from October. Rates will rise by a
further 2p in 2008, and by another 1.8p the year after.
Business
Corporation tax The Chancellor responded to warnings that a growing
number of companies may quit Britain by promising to cut corporation tax
from 30 per cent to 28 per cent, from April 2008.
Small business Small business tax will be raised from 20p to 22p by
2009 to prevent tax avoidance by individuals. Tax relief for “genuine” small
companies will mean those with profits of £150,000 paying a tax rate as low
as 15 per cent.
Tax avoidanceThe Treasury has closed a tax loophole used by life
insurers on intercompany loans that are “contingent” on profits, to raise
its tax revenue by £120 million this year and £165 million each year for the
next two years.
Environment
Biofuels Biofuels will continue to benefit from lower duty until 2010,
with the differential between biofuels and standard fuels fixed at 20p per
litre.
Air passenger duty The Chancellor ruled out charging VAT on flights — a
move suggested by the Conservatives — arguing that businesses would be able
to claim back the extra charges and that carbon emission savings would be
relatively insignificant.
Landfill tax Standard taxes will rise by £8 a tonne per year from April
2008 to 2012.
Other green measures The Government confirmed plans to exempt
zero-carbon homes from stamp duty. The scheme covers homes worth up to
£500,000 until 2012. An extra £6 million in grants will be available for
homeowners wanting to install microgeneration devices such as solar power
panels.
Gambling
Internet The duty rate on internet gaming operators rose to 15 per
cent, in line with land-based bookmakers and bingo firms.
Casinos The Government introduced a new gaming duty regime, which at
the top tier will mean the proposed new super-casino in Manchester pay tax
of 50 per cent. The changes will raise tax for all casinos, with larger
premises paying up to an extra £1 million per year. It is expected to lead
many companies to reconsider their expansion and investment plans.
Bingo Bingo operators expressed disappointment at the failure of the
Chancellor to scrap VAT on bingo, which would have brought it in line with
other gambling.
Health
NHS The Chancellor promised that the NHS in England would have an
additional £8 billion in 2007-08, and in Britain as a whole an additional
£10 billion. These were, he said, the “biggest cash increases ever”, a rise
in cash terms of 10 per cent and in real terms of 7 per cent. However, the
figures were not new, as they reflect promises made in the spending review
that will end this time next year.
Defence
Counter terror: Security and intelligence services given an extra
£86.4 million to fight terrorism, taking the total intelligence budget to
£2.25 billion by 2007/8.
Armed forces: A further £400 million has been set aside from the
reserves as a down-payment for operations in Iraq and Afghanistan next year.
Education
Education budget Spending will rise as a share of national income from
4.5 per cent in 1997 to 5.6 per cent in 2010. However, the Conservatives
said that the statement was “very misleading” as it implied that education
spending would grow steadily over the next few years. In fact, it will reach
5.6 per cent this year and then “flatline”, the Conservatives said.
Training Every teenager will have the right to stay at school or in
job-related training until 18 and 50,000 16-and 17-year-olds will be paid a
“training wage” in exchange for signing up for courses. The Chancellor said
that the initiatives would help tackle the shortage of skilled workers in
Britain.
Small firms that take on staff who lack “the most basic of skills” will
be offered £2,000 to pay for vital training.
Retailers Tesco, J Sainsbury, Asda, B&Q, Marks & Spencer and
the British Retail Consortium yesterday signed an agreement to work with the
Department for Work and Pensions to offer training programmes and job
opportunites to help up to 100,00 long-term unemployed back into work.
VAT The Chancellor promised to lift VAT on academies, which will allow
them to open up their facilities and playing-fields to the local community,
without incurring bills for millions of pounds or the VAT cost of the
building of their school. Privately-sponsored academies cost on average £24
million to build.
Government sell-off
Asset sales The Chancellor announced a raft of asset sales to reap £36
billion over the next three years, double previous projections. The sell-off
will include the £6 billion student loan book and spectrum transmission
frequencies, but the Treasury refused to put a price on the spectrum.
Science
Science and technology Spending is to rise by £1.3 billion to a £5
billion by 2010-11, a 2.5-2.7 per cent increase in real terms each year. The
announcement had not been expected until the spending review, and was
brought forward to reassure scientists angered by a DTI decision to cut £98
million from this year's research budget.
Tax credit The research and development tax credit for business was
raised to 130 per cent.
Property
Stamp duty Mr Brown shrugged off pressure from mortgage lenders by
leaving the threshold for the starting rate of stamp duty at £125,000. He
also left the higher bands — at which 3 per cent and 4 per cent tax is
levied — at £250,000 and £500,000.
Council taxThe Lyons report recommends three new council tax bands at
the top and one at the bottom. Owners of houses worth more than £545,000
face rises of between £300 and £2,500 a year. Owners of houses worth less
than £81,000 would pay £140 less tax.
Commercial rates relief Rates relief on vacant industrial property
will be restricted to six months, from April 2008. (Currently there is 100
per cent relief for the entire time a property is vacant.) All other empty
commercial property will be entitled to only three months’ relief, after
which owners will have to pay full rates. (Currently there is 100 per cent
rates relief for three months, and 50 per cent relief thereafter.)
Reits Changes were introduced to reduce the tax disadvantages of
on-shore and unlisted property investment vehicles relative to real estate
investment trusts (Reits). An elective regime will end the taxation of
rental income from open-ended investment companies (Oeics) and other
authorised property investment companies, a sector which sits on around £13
billlion of the UK commercial property industry’s £410 billion of assets.
Pensions
Financial Assistance Scheme The size of the scheme, which provides aid
to those who lost their pension through company insolvency, was quadrupled
from £2 million to £8 million. This means that an estimated 125,000 pension
victims should now be eligible to reclaim up to 80 per cent of the savings
they lost.
Pension credit: The credit, the guaranteed minimum income for a
pensioner, will rise in line with wages, from a weekly £114 today to £130 by
2009-10.
Home assistance Pensioners installing insulation and central heating in
their homes will receive grants worth £300 to £4,000.
Personal allowance The Chancellor will raise the higher personal
allowance for those aged over 65 to £1,180 above normal indexation from
April 2008, which will remove 580,000 pensioners from paying tax.
