Budget 2007: Key tax measures at a glance

"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

Continued...

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Comments

NI and Higher Rate Tax

evansjez | | Permalink

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?

Charities hit

nigelreese | | Permalink

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

richard.murphy's picture

Reasoned reactions

richard.murphy | | Permalink
abelljms's picture

gas guzzlers

abelljms | | Permalink

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.

Inheritance Tax

AnonymousUser | | Permalink

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

Really?

20%

AnonymousUser | | Permalink

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.

HI Helen

Anonymous | | Permalink

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.

Budget Complification - Time to take Stock

mykejacobs | | Permalink

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!

It's worse than that Gordon.

AnonymousUser | | Permalink

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.

10% starting rate

Donert | | Permalink

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

So NI is just another name for income tax

gkynaston | | Permalink

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%.

National Insurance Tax

AnonymousUser | | Permalink

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?

Richardrussell's picture

Marginal Rates

Richardrussell | | Permalink

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.

abelljms's picture

budgie 2007

abelljms | | Permalink

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