| This
is our 8th Budget Comment and there’s one thing
they all have in common – Gordon Brown … |
| We’re
not going to comment on the changes that take place after
5 April 2008 - other than to ask why he lays out these
future changes. He won’t be Chancellor, Labour might
not be in power and it merely buries this year’s
changes below headlines of the ludicrously misleading
20% basic tax rate. |
| And
let’s not comment on the really technical and the
‘not of general interest’ stuff. |
| That
just leaves the changes he made last year that come into
effect this year. |
The
most interesting of which is the increase in the Inheritance
Tax threshold and in true Gordon style we can look ahead
4 years. So let’s do so – it is after all
a tax that most will now come across. The tax free amounts
are:
| |
|
£ |
|
| |
Year
ending 5 April 2007 |
285,000 |
|
| |
Year
ending 5 April 2008 |
300,000 |
|
| |
Year
ending 5 April 2009 |
312,000 |
|
| |
Year
ending 5 April 2010 |
325,000 |
|
| |
Year
ending 5 April 2011 |
350,000 |
|
|
| Not
bad increases compared to the recent past but why save
the biggest change to last and again why go that far ahead
anyway? Inheritance Tax is an area of significant concern
to many people - have a look at our comment on Inheritance
Tax on the News & Comment page.
|
| As
for the 2007 Budget, you are bound to have heard other
comments, please let us know if you have any observations
or need further information. |
Finally;
why do we say that the 20% tax rate is ludicrously misleading?
Because in two years time his blending of Income Tax and
National Insurance will be complete. Combining the two,
there will then be three rates on earned income for people
under 65:
| |
The
first (say) £5,500: |
nil |
|
| |
The
next (say) £37,500: |
31% |
|
| |
Anything
above: |
41% |
|
|
| The
20% rate is nowhere to be seen!
|
Rates and Allowances
for 2007 and 2008
Rates and allowances
for income tax, corporation tax, capital gains tax, inheritance
tax and the pension schemes earnings cap are set out below.
|
|
2006-07 (£)
|
2007-08 (£)
|
Increase (£)
|
| Income
tax allowances |
|
|
|
| Personal
allowance
Personal allowance for people aged 65-74
Personal allowance for people aged 75 and over |
5,035
7,280
7,420 |
5,225
7,550
7,690 |
190
270
270 |
| Income
limit for age-related allowances |
20,100 |
20,900 |
800 |
| 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
Blind person's allowance |
6,065
6,135
2,350
1,660 |
6,285
6,365
2,440
1,730 |
220
230
90
70 |
| Capital gains tax annual
exempt amount:
Individuals etc
Other
trustees |
8,800
4,400 |
9,200
4,600 |
400
200 |
| Inheritance
tax threshold |
285,000 |
300,000 |
15,000 |
| Taxable bands 2006-07 (£)
|
Taxable bands 2007-08 (£)
|
| Starting
rate 10% |
0
– 2,150 |
Starting
rate 10% |
0
– 2,230 |
| Basic
rate 22% |
2,150–
33,300 |
Basic
rate 22% |
2,230–
34,600 |
| Higher
rate 40% |
Over
33,000 |
Higher
rate 40% |
Over
34,600 |
| Corporation tax profits
2007-08 (£) |
|
| Small
companies' rate 19% |
0
– 300,000 |
| Marginal
relief |
300,001 – 1,500,000 |
| Main
rate 30% |
1,500,001 or more |
The
main rate of corporation tax for 2007-08 will be 30 per cent.
National Insurance changes from 6
April 2007
|
|
2006/2007 |
2007/2008 |
| Class
1 Employees |
| On
first |
£97
pw |
Nil
|
£100
pw |
Nil
|
| Between
|
£97
- £645 pw |
11%
|
£100
- £670 pw |
11%
|
| Over
|
£645
pw |
1% |
£670
pw |
1% |
| Employee's
contracted-out rate |
1.6% |
|
1.6% |
Married
womans
reduced rate |
4.85%
of £97.01 to £645 pw, 1% above £645 |
4.85%
of £100.01 to £670 pw, 1% above £670 |
| Class
1 Employers |
| On
first |
£97
pw |
Nil
|
£100
pw |
Nil
|
| Over |
£97
pw |
12.8%
|
£100
pw |
12.8%
|
| Employers'
contracted-out rebate, salary related schemes |
3.5% |
|
3.7% |
| Employers'
contracted-out rebate, money purchase schemes |
1% |
|
1.4% |
| Class
2 Self employed |
| Flat
rate |
£2.10
pw |
|
£2.20
pw |
| Small
earnings exception |
4,465
pa |
|
4,635
pa |
| Special
Class 2 rate for share fisherman |
£2.75
pw |
|
£2.85
pw |
| Special
Class 2 rate for volunteer development workers |
£4.20
pw |
|
£4.35
pw |
| Class
3 Voluntary |
| Flat
rate |
|
£7.55
pw |
|
£7.80
pw |
| Class
4 Self employed |
| On
profits between |
£4,895
- £32,760 pa |
8%
|
£5,225
- £34,840 pa |
8%
|
| |
above £32,760 |
1% |
above £34,840
|
1% |
Stamp
Taxes
Transfers
of property (consideration paid)
| Rate |
All
land in the UK |
Land
in disadvantaged areas |
| |
Residential |
Non-residential |
Residential |
Non-residential |
| Zero |
£0-125,000 |
£0-150,000 |
£0-150,000 |
All |
| 1% |
Over
£125,000 – 250,000 |
Over
£150,000 – 250,000 |
Over
£150,000 – 250,000 |
N/A |
| 3% |
Over
£250,000 – 500,000 |
Over
£250,000 – 500,000 |
Over
£250,000 – 500,000 |
N/A |
| 4% |
Over
£500,000 |
Over
£500,000 |
Over
£500,000 |
N/A |
New
leases (lease duty)
Duty
on the premium is the same as for transfers of land (except
that special rules apply for premium where rent exceeds £600
annually). Duty on the rent is charged on the Net Present
Value (NPV). The rates indicated apply to the amount of NPV
in the slice, not to the whole value.
| Rate |
Net
Present Value of Rent Rate |
| |
Residential |
Non-residential |
| |
Slice
of NPV |
| Zero |
£0
- £125,000 |
£0
- £150,000 |
| 1% |
Over
£125,000 |
Over
£150,000 |
The rate
of stamp duty / stamp duty reserve tax on the transfer of
shares and securities is unchanged at 0.5% for 2007-08. |
