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Here is a summary of the key points announced by Chancellor Gordon Brown in his 2006 Budget. This may be his last Budget and there could be some changes here which may affect your financial planning. Whether you own property in the UK, generate rental income or are looking to retire there, it may be worth taking 5 minutes to
The Economy
Chancellor Gordon Brown said the British economy is ‘strong and strengthening’. The chancellor said the economy is growing at annual rate of 2.5% and inflation is on target. Net debt to rise from 36.4% of national income to between 36% and 38% in subsequent years. Long-term interest rates were the lowest they have been for 40 years at 4 per cent. Public investment £26 billion this year and rising in the years ahead to £29 billion, £31 billion, £32 billion, £34 billion, £36 billion. Gross investment to reach £63 billion in 2010-11.
The Chancellor kept his forecasts for economic growth at the levels he announced in December’s pre-Budget report. The UK will grow by 2% to 2.5% in 2006, 2.75% to 3.25% next year and 2.75% to 3.25% for 2008. Current borrowing will be higher than expected at £11 billion this year and £7 billion in 2006-07. Public sector pay rises will be limited to 2.25%. Mr Brown said investment in schools had gone up from £600 million at the end of the last economic cycle in 1997 to £6 billion in 2006. Business investment of £113 billion this year, expected to grow between 4.5% and 5.25% in both 2007 and 2008. Small firms to get £100 million of new funding. £440 million direct to schools next year.
Tax
Personal tax allowance raised from £4,895 to £5,035. Personal tax allowance aged 65-74 up £190 to £7,280. Personal tax allowance aged 75 and over up £200 to £7,420. First £2,150 of taxable income after personal tax allowance taxed at 10%, up from the first £2,090. Basic rate unchanged at 22% between earnings of £2,151 and £33,300. Capital gains tax allowance up to £8,800 a year, from £8,500. Earnings over £33,300 taxed at 40%, previously £32,400. Raise child element of child tax credit by 14% in three years’ time to £88 a week for a family with two children. Inheritance tax rates increased in phases up to £325,00 in four years’ time. Starting with new allowance of £285,000 in 2006-07, up to £300,000 in 2007-08, £312,000 in 2008-09 and £325,000 in 2009-10.
Tax incentives for venture capital to be refocused with 30% relief for investment in venture capital trusts. New staged car excise levels, including a zero rate for those cars with the lowest emissions. Three million cars will be taxed at £100 or less, compared with 300,000 now. New band of £40 for cars with low emissions, up to a maximum of £210 for the most polluting vehicles. Tax increases: 9p on a packet of 20 cigarettes, 3p on a pack of five cigars, 4p on a bottle of wine, 1p on a pint of beer. Whisky tax frozen for the ninth successive year, as is champagne in anticipation of an English win at this year’s World Cup in Germany.1.25p (5.6p a gallon) on a litre of sulphur-free petrol and diesel, effective from 1 September. Doing more for families, meaning no income tax liability for a family earning £425 a week. Exemption to stamp duty on residential house purchases up to £125,000, from £120,000, and up to £150,000 in the 2,000 specially designated Enterprise Areas. Corporate tax to remain competitive with international rates.
If you need any help with how the Budget could affect you and how to limit your tax exposure legally, then contact us today. |
