Budget 2007: Key tax measures at a glance

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"No return to boom and bust" is on the agenda according to the chancellor, but with 81 budget notes there have been some major changes announced to simplify income tax, tinker with corporation tax and overhaul the capital allowances system for long and short life assets.

Major new announcements, with links into tax features

Income tax

Major simplification measures include:

  • 10% starting rate band to be abolished from 2008

  • basic tax rate cut from 22% to 20% by 2008

  • Top rate band of income tax to rise to 43,000 by 2009

  • Confirmation of the Carter proposal that the SA enquiry window will be aligned with the filing date.

National insurance

Upper earnings limit raised by 75 by 2008 and aligned with higher rate threshold by 2009

Compan...

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23rd Mar 2007 14:23

NI and Higher Rate Tax
If the upper earnings limit for NI is to rise by £75 per week above inflation from April 08 and the higher rate threshold for tax is to be aligned with the UEL from April 09 does this mean the higher rate threshold for tax will increase by at least £3,900 above inflation?

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22nd Mar 2007 08:37

Charities hit
Surely a reduction in basic rate of income tax will mean that charities will only be able to reclaim 20% tax instead of 22%.

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21st Mar 2007 14:48

Reasoned reactions
For an anlysis of what the budget means, see this:
http://www.taxresearch.org.uk/Blog/2007/03/21/the-budget-now-ive-seen-the-figures/

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27th Mar 2007 11:19

gas guzzlers
if it looks like a gas guzzler it is one - most of us can spot one when it goes by.....

I am sure the official defn. drones on about kilos of lead or CO per km travelled.

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22nd Mar 2007 14:37

Inheritance Tax
Inheritance tax
The threshold is to be raised from 3285,000 to £350,000 in 2010/11.


Really?

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21st Mar 2007 15:08

20%
in 2006 2007 the rates were
17.5% vat
18% CIS deductions
19% small co CT
20% tax on interest
22% income tax

These are all converging towards 20% which appears to be a phsycologically correct figure.

Q: Does this imply that the VAT will head towards 20%?

Also 12.8% is a bit of an anomoly.

if the calculation was that precise all those years ago why does it not change? if it was precise then it surely cannot be precise now.

Why not round up the .8 ? is it because this Chancellor is suprestitious and belives 13% to be unlucky.

i think we should be told.

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By Anonymous
23rd Mar 2007 09:06

HI Helen
Thank you for pointing that out, we have all been working flat out to cover such a huge number of proposals and the odd typo creeps in from time to time when one is tired.

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23rd Mar 2007 16:16

Budget Complification - Time to take Stock
The 10% starting rate has not been abolished, just restricted to unearned income and capital gains- no simplification there. Capital allowances completely revamped and much reduced. No simplification there either. The childless poorly paid lose if they have taxable income under £18,600; lower paid pension contributors lose as their tax credit will fall from 28.21% to 25% when the basic rate falls to 20%, although top rate taxpayers will still get a 40% tax relief; charities benefiting from Gift Aid will lose a £3.21 credit per hundred pounds of donations as well for the same reason. Small companies lose through a 3% increase in Corporation Tax over 3 years. 190 pages of Budget Notes from the Revenue (sorry HMRC) confirms that all this jiggery pokery will lead to a huge Finance Bill although the nominal tax take will be no different, and you should take account of the extra £2.5 Billion raised in the PBR. Together with an extra £8 Billion of borrowing and a staggering sale of £36 billion of the family silver, this is a bad budget which will complicate the tax code even further and demonstrates that Gordon has completely lost control of the economy. His crowning glory will be increasing NICs for the higher paid by expanding the taxable (sorry NICable) band to £43,000. A sorry tale and not a recommendation for promotion. Beta double minus!

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23rd Mar 2007 10:54

It's worse than that Gordon.
include the 12.8% Er's NI, and it's
(31+12.8)/112.8 = 38.8%
and
(41+12.8)/112.8 = 47.7%

And if you spend any of it on stuff other than food etc, you lose 17.5/117.5 of what's left.

So from £1.128 you'd get actual value of 50p. as a higher rate tax payer. Effective tax rate = 55.7%

(I can't count as a rule, so feel free to correct me)

Outrageous. Bring back the sleazy Tories to cut taxes. Fire anyone in the Public sector earning more than £50k. And seize all the assets of MPs for the duration they're in power, plus 5 years, and house them in monasteries / nunneries....and make them wear sackcloth.

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By Donert
22nd Mar 2007 16:44

10% starting rate
Whilst the starting rate will be abolished generally it appears that it will still apply to investment income and capital gains. Is that right?

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22nd Mar 2007 17:59

So NI is just another name for income tax
Does the alignment of the income tax and NI thresholds mean that the government is finally admitting the obvious reality that employees NI is just another name for income tax, with overall rates of 31% and 41%.

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25th Mar 2007 10:52

National Insurance Tax
A couple of years ago Mr Brown said in his speech that, in order to fund the increased spending in the NHS, he would increase the "National Insurance tax". I'm not sure if that hit the published speech, I can't remember, but I do remember him saying that whilst I was watching him on the TV.

However, it is not a tax, never has been a tax and never will be a tax. If it was a tax or ever had been a tax, tax rates would have increased and, since tax rates have not increased, it can't be a tax. Is that clear?

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26th Mar 2007 13:35

Marginal Rates

I've read so much stuff on the budget over the last couple of days, I forget where I saw it, but it was pointed out that the marginal tax rate for someone on tax credits was actually 72%:

- income tax 22%
- national insurance 11%
- tax credit clawback 39%

Is that right? If so, it highlights what a bad idea tax credits are as they disincentivise.

BTW, loved the Rory Bremner sketch on the budget that is advertised on this site, courtesy of the Telegraph, it is excellent and absolutely spot on.

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26th Mar 2007 17:03

budgie 2007
i can't believe how seriously so many posh commentators are taking Gordon's latest..

how about an assessment or comments on what he said purely about 2007/08, as that is what we can be confident is going to happen?
seems to me that 2008 may never happen? and if it does let's chat about it in march 2008 when it is worth thinking about it.......

anyway I'll get in to trouble now.......
http://www.chartered.org/bud2007/bud07%20spring1.htm


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