The key announcements

Unemployed and low paid

Unemployment claimant count at 920,000.
Review of National Insurance and income tax system for lower-paid workers.
The number of low-skilled jobs will fall from 2.1m to 600,000.

Women

New help for working women to close the pay gap with men.
Funding doubled for training low-skilled women as part of measures to bring more than 30,000 lone parents into work.

Income tax

Lower rate

10p income tax band to be scrapped from April 2008.

Basic rate

Basic rate of income tax to fall from 22p to 20p from 6 April 2008.

Allowances

Personal allowance:

Under 65 increased from £5,035 to £5,225
65 - 74 increased from £7,280 to £7,550
75 and over increased from £7,420 to £7,690

Married couples/civil partners allowance (relief at 10 per cent):
Age 65 before 06/04/2000 increased from £6,065 to £6,285
Age 75 and over increased from £6,135 to £6,365
Minimum amount increased from £2,350 to £2,440

Child element of child tax credit to rise 14 per cent over three years – worth up to £88 a week by 2009 for a two-child family.

Children to get an additional £250, or £500 for those in low paid families, in their Child Trust Funds at the age of seven.

Tax Credits

Working tax credit up by £1bn per year.
Level at which family with two children pay tax is now at £22,500 and set to rise to £24,250 by 2009.

Inheritance Tax

Thresholds

From 6 April 2007, the amount of money that people can pass on without facing inheritance tax increased to £300,000.

The threshold will rise to £312,000 in April 2008, to £325,000 in April 2009 and to £350,000 in 2010. Above those thresholds, tax will continue to be charged at 40 per cent.

Capital Gains Tax

Allowance increased for individuals from £8,800 to £9,200 this tax year.
Allowance increased for trusts from £4,400 to £4,600 this tax year.

Property

Stamp duty

For residential land and property outside of disadvantaged areas there is no change to the current bands:

0 per cent up to £125,000
1 per cent from £125,001 to £250,000
3 per cent from £250,001 to £500,000
4 per cent over £500,000

No stamp duty on zero-carbon homes up to £500,000.
Details published on REITS (real estate investment trusts).

Measures worth £970m for shared equity to help new homeowners on to the housing ladder.

Savings

Cash ISA allowance up 20 per cent to £3,600 from 6 April 2008.

Alcohol

Beer up 1p per pint.
Cider up 1p per litre.
Wine up 5p a bottle and sparkling wine up 7p.
No change for spirits.

Tobacco

The price of a pack of 20 cigarettes increased by 11p.

Motorists

Emissions

Tax on the highest-polluting vehicles or 4x4s up to £400 this year.
Tax cut for low-emission vehicles from £50 to £35.

Fuel duty

Annual increase in fuel duty suspended until this October.
Fuel duty to rise by 2p a litre in 2008 and by 1.8p in 2009.

Education

Student debt

Student debt worth £6bn to be sold off.

Pensioners

From April 2008 people aged 65 will not pay tax on earnings below £8,460.

For those over 75, the tax-free allowance will rise annually to £10,000 by 2011.
Pension Credit will rise from £114 to £130 per week by 2009/10.

Retired people will receive between £300 and £4,000 for the installation of insulation and central heating.

Health

NHS to receive an extra £10bn this year.
The investment levels for 2008 to 2011 will be decided in the forthcoming spending review.

Defence

A £1m endowment for the fund of families that have been affected by terrorist acts at home and abroad.

Business

Taxation

The size of companies that can claim higher tax credits for research and development is to be doubled.

Tax credit for creative industries will be expanded.

Tax incentives for venture capital to be reduced to 30 per cent relief for investments in venture capital trusts.

Mainstream corporation tax reduction from 30p to 28p from April 2008.

Corporation tax increase on small corporations to rise from 20p to 22p by 2009.

Environment

Climate change

Climate change levy to be inflation indexed.
Proposals to strengthen and extend the European Union emissions trading scheme will be introduced.
Industry consultation on carbon capture technology.

Sport and Culture

Olympics

About £200m for training facilities for athletes, matched by £100m sponsorship and £300m of Lottery money.
Olympic trust fund launched.
Initial funding of £34m for new national sports foundation.

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This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without appropriate professional advice after a thorough examination of their particular situation. Budget 2007 is subject to the Finance Bill becoming law. Levels and bases of, and reliefs from, taxation are subject to change.

Article date: 03.07