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2001 Budget Comment
The main question arising from this
Budget is: how does the Press manage to write so many column
inches?
Once you clear away the spending bits,
the political bits, the measures coming in over a year from
now (unless there is a change of Government!) and the technical
changes to existing legislation, there is nothing to comment
on.
Instead we set out:
Rates and Allowances
for 2001 and 2002
Rates and allowances
for income tax, corporation tax, capital gains tax, inheritance
tax and the pension schemes earnings cap are set out below.
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2000-01 (£)
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2001-02 (£)
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Increase (£)
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Income tax allowances
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Personal allowance
Personal allowance for people aged 65-74
Personal allowance for people aged 75 and over
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4,385
5,790
6,050
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4,535
5,990
6,260
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150
200
210
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Income limit for age-related
allowances
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17,000
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17,600
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600
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Married couple’s
allowance for people born before 6 April 1935
Married couple’s allowance –aged 75 or more
Minimum amount of married couple’s allowance
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5,185
5,255
2,000
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5,365
5,435
2,070
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180
180
70
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Children’s tax credit
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-
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5,200
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-
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Capital gains tax annual
exempt amount:
Individuals etc
Other
trustees
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7,200
3,600
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7,500
3,750
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300
150
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Inheritance tax threshold
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234,000
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242,000
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8,000
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Pension schemes earnings
cap
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91,800
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95,400
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3,600
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Taxable bands 2000-01 (£)
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Taxable bands 2001-02 (£)
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Starting rate 10%
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0 –
1,520
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Starting rate 10%
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0 –
1,880
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Basic rate 22%
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1,521 –
28,400
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Basic rate 22%
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1,881 –
29,400
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Higher rate 40%
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Over 28,400
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Higher rate 40%
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Over 29,400
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Corporation
tax profits 2000-01 and 2001-02 (no change) (£)
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Starting rate 10%
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0 –
10,000
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Marginal relief
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10,001 – 50,000
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Small companies’
rate 20%
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50,001 – 300,000
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Marginal relief
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300,001 – 1,500,000
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Main rate 30%
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1,500,001or more
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The
main rate of corporation tax for 2002-03 is unchanged at 30
per cent.
National Insurance changes from 6
April 2001
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2000/2001
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2001/2002
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Class 1 Employees
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On first
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£76 pw
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Nil
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£87 pw
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Nil
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Between
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£76 - £535
pw
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10%
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£87 - £575
pw
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10%
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Over
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£535 pw
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Nil
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£575 pw
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Nil
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Class 1 Employers
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On first
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£76 pw
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Nil
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£87 pw
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Nil
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Between
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£76 - £575
pw
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12.2%
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£87 - £575
pw
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11.9%
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Over
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£535 pw
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12.2%
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£575 pw
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11.9%
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Class 2 Self employed
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Flat rate
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£2 pw
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£2 pw
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Class 3 Voluntary
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Flat rate
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£6.55 pw
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£6.75 pw
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Class 4 Self
employed
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On profits between
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£4,385 - £27,820
pa
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7%
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£4,535 - £29,900
pa
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7%
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(maximum annual contribution)
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£1,640
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£1,776
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Measures previously
announced that start on 6 April 2001
Nowadays the Chancellor's Taxation announcements
usually take effect over a year after the Budget. A good example
is the 'replacement' of the Married Allowance with Children's
Tax Credit. The fact that there was a gap year between the
abolition of the one and the introduction of the other was
not headline news. But this slight of hand saved the Treasury
around £2 billion and cost nothing in adverse comment.
Not bad for an afternoon's work!
Here are the big changes announced some
time ago:
Pensions: see our page
on Stakeholder
for Investors.
Children's Tax Credit: see our page on Children's
Tax Credit.
National Insurance: see the above chart.
Some
Politics
The
FT on 10 March 2001 showed a comparison of the three major
parties attitudes to Personal Tax. The most striking was the
difference between Labour and Tory on the subject of Inheritance
Tax.
Apparently one of them has no plans
for the tax, the other has plans to increase the exempt amount
from £242,000 to £500,000, and give special exemption
for primary residences. Email: BlytheTax and
be surprised which is which...
Both Labour and Tory favour the recent
move from Benefits to Tax Credits (like the new Children's
Tax Credits). We support the politics of this, but we
are not sure what to think about the fact that it will require
maybe 2 million more people to complete Tax Returns!
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