Budget Comment March 2002
Introduction
Once again, the main question arising from this Budget is: how does the Press manage to write so many column inches?
Apart from the dramatic increase to National Insurance, once you clear away the spending bits, the political bits, the measures coming in over a year from now and the technical changes to existing legislation, there is little to comment on.
The chart of new Rates and Allowances is, as always, set out below.
Rates and Allowances for 2002 and 2003
Rates and allowances for income tax, corporation tax, capital gains tax, inheritance tax and the pension schemes earnings cap are set out below.
| 2000-02 (£) |
2001-03 (£) |
Increase (£) |
|
| Income tax allowances | |||
| Personal
allowance Personal allowance for people aged 65-74 Personal allowance for people aged 75 and over |
4,535 |
4,615 |
80 |
| Income limit for age-related allowances | 17,600 |
17,900 |
300 |
| 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 |
5,365 5,435 2,070 |
5,465 5,535 2,110 |
100 100 40 |
| Children's tax credit | 5,200 |
5,290 |
90 |
| Capital gains tax annual
exempt amount: Individuals etc Other trustees |
7,500 |
7,700 |
200 |
| Inheritance tax threshold | 242,000 |
250,000 |
8,000 |
| Pension schemes earnings cap | 95,400 |
97,200 |
1,800 |
| Taxable bands 2001-02 (£) |
Taxable bands 2002-03 (£) |
||
| Starting rate 10% | 0 – 1,880 |
Starting rate 10% | 0 – 1,920 |
| Basic rate 22% | 1,881 – 29,400 |
Basic rate 22% | 1,921 – 29,900 |
| Higher rate 40% | Over 29,400 |
Higher rate 40% | Over 29,900 |
| Corporation tax profits 2000-01 and 2001-02 (no change) (£) |
|
| Starting rate Zero % | 0 – 10,000 |
| Marginal relief | 10,001 – 50,000 |
| Small companies' rate 19% | 50,001 – 300,000 |
| Marginal relief | 300,001 – 1,500,000 |
| Main rate 30% | 1,500,001or more |
National Insurance changes from 6 April 2002
| 2001/2002 |
2002/2003 |
|||
| Class 1 Employees | ||||
| On first | £87 pw | Nil | £89 pw | Nil |
| Between | £87 - £575 pw | 10% | £89 - £585 pw | 10% |
| Over | £575 pw | Nil | £585 pw | Nil |
| Class 1 Employers | ||||
| On first | £87 pw |
Nil | £87 pw | Nil |
| Between | £87 - £575 pw |
12.2% | £87 - £585 pw | 11.8% |
| Over | £575 pw |
12.2% | £585 pw | 11.8% |
| Class 2 Self employed | ||||
| Flat rate | £2 pw | £2 pw | ||
| Class 3 Voluntary | ||||
| Flat rate | £6.75 pw | £6.85 pw | ||
| Class 4 Self employed | ||||
| On profits between | £4,535 - £29,900 pa | 7% | £4,615 - £30,420 pa | 7% |
| (maximum annual contribution) | £1,776 | £1,806 | ||
National Insurance Rates 2003-04
For the year 2003/04 there will be an additional 1% contribution on all earnings above the threshold of £89 per week. This 1% applies to employees, employers and the self-employed. This is in addition to existing rates of contribution below the upper earnings limit for employees and the upper profits limit for the self-employed.
This means that the starting point for both employers’ and employees’ NICs in 2003-04 will be £89 per week and no employee will pay NICs on earnings below this amount. Rates and thresholds are set out below.
|
|
2002-03 |
2003-04 |
| Primary threshold |
£89 per week |
£89 per week |
| Secondary threshold | £89
per week |
£89
per week |
| Employees' primary class 1 rate on earnings between primary threshold and upper earnings limit |
10% |
11% |
| Employees' primary class 1 rate on earnings above upper earnings limit |
1% |
|
| Employers' secondary class 1 rate on earnings above secondary threshold |
11.8% |
12.8% |
| Lower profits limit (for self-employed Class 4 contribution) |
£4,615 |
£4,615
|
| Class 4 rate on profits between lower and upper profits limit | 7% |
8% |
| Class 4 rate on profits above upper profits limit | - |
1% |