 News
21st March 2007
Budget 2007
In what will most likely be his final Budget, Chancellor Gordon Brown
cut the basic tax rate by 2p but critics have called it a 'con trick'.
So exactly what difference will the Budget 2007 make to your pocket?
Taxes
The main points:
- Basic rate of income tax to fall from 22p to 20p from April next year
- Losing the lower start rate of pay so everyone who pays tax will start
at 20p in the pound
- Income tax threshold will rise to £43,000 from April 2009
- Tax-free savings limit for ISA contributions will be increased to
£7,200 from next April
What this means:
The cut in basic tax rate by 2p will make very little difference, as
the 10p income tax rate on the first £2,150 earned (2006/2007 tax year)
above your personal allowance is being abolished. This means in effect
that you will have to pay 20 per cent as soon as you earn more than your
personal allowance rate. Together with the rise in National Insurance
for higher earners, most people won't see any change in their pay packets.
Family
The main points:
- Child benefit will rise 15 per cent by 2010
- Additional child benefit will be paid to mothers with new babies
- Vehicle Excise Duty (VED) on the highest polluting vehicles, including
many people carriers and 4x4s will rise from £210 to £300 this year
and then £400 in 2008.
What this means:
In his pre-Budget speech the Chancellor announced that child benefit
will be paid to mothers in the last months of pregnancy to help with the
costs of the birth. The biggest influence in the Budget will be for families
who drive people carriers or 4x4s and will have to find an extra £80
car tax this year, and a further £100 next year.
Low income families
The main points
- In April, benefit payments for the poorest children will rise to £64
a week
- The £40-a-week in-work bonus paid to lone parents to be extended to
their first 12 months in work.
- Working tax credit, claimed by 1.5 million Britons, will receive a
£1bn boost
What this means:
Working families on the lowest incomes will receive more help to reduce
child poverty. Families who receive Tax Credits should be £7.10
a week better off as a result of the extra funds, according to the Chancellor.
Transport
The main points
- Vehicle Excise Duty (VED) on the highest polluting vehicles, including
many people carriers and 4x4s will rise from £210 to £300 this year
and then £400 in 2008.
- The least-polluting vehicles to have their duty cut to £35
- Fuel duty up 2p per litre from October, in line with inflation
What this means:
Because of the new child seatbelt laws that came into effect last year,
many families will find themselves forced to find extra money to cover
the increase in car tax for many people carriers and 4x4s. Along with
the inflation-linked rise in petrol, the Budget has hit many families
hard when it comes to their cars.
Sin taxes
The main points
- Beer will rise by 1p a pint from midnight Sunday, cider by 1p a litre,
wine by 5p a bottle and sparkling wine by 7p. Duty on spirits will be
frozen.
- Cigarettes to rise by 11p a packet.
- VAT on nicotine patches and similar products to be cut from 17.5 per
cent to 5 per cent.
The usual price increases will be applied almost immediately for cigarettes
and alcohol, with the exemption on spirits. A 20 a day smoker will be
paying an extra £39.80 a year. If you're planning on giving up however,
you will be able to save on the VAT added to nicotine replacement therapy.
Overall
The Chancellor had no money to spend in his last ever Budget, and his
opposition have drawn on that saying 'What the Gord giveth, the Gord taketh
away'.
The big issues are the changes to income tax and National Insurance,
along with the so-called 'green' issues of hitting families with 'gas
guzzling' 4x4s and people carriers.
At best you can expect little or no difference in your fincances from
this Budget, at worst - families with big cars, smokers, and those who
like the occasional drink - will see this Budget make a slightly bigger
dent in their pocket.
Where to next?
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