In his eighth Budget the Chancellor Gordon Brown delivered some surprises
and, as usual, confirmed many of the changes already announced over the
past few months. 'I propose to freeze rates' was a common theme throughout
the speech with many rates, including income tax and national insurance
contributions, staying the same and allowances increasing by statutory
indexation.
Personal allowances for those aged 65 and over will increase in line
with earnings.
The single universal tax regime for all pensions is delayed until
April 2006.
The company car fuel benefit amount is unchanged. There will be a
new tax regime for company vans.
The government is consulting on phasing out the payment of working
tax credit by employers and replacing it with direct payments to employees.
Employer-contracted childcare and employer-provided childcare vouchers
up to £50 a week will be exempt from tax and national insurance
from April 2005. In addition childcare provided by foster carers will
be eligible for tax credit support.
A grant will be available to employers with fewer than 500 employees
who set up new payroll giving schemes from April 2004.
Companies will be chargeable to corporation tax at a minimum of 19%
on profits distributed to non-company shareholders.
First year capital allowances on plant and machinery for small businesses
will increase from 40% to 50%, although the 100% allowances for computer
expenditure end after 31 March 2004.
VAT registration and deregistration thresholds and the turnover ceiling
for cash accounting and annual accounting schemes have been increased.
The inheritance tax threshold will increase from £255,000 to
£263,000. The capital gains tax annual exemption will increase
to £8,200.
There are measures to clarify and amend stamp duty land tax and to
modernise the taxation of trusts.
The tax rate for trusts will increase from 34% to 40% (25% to 32.5%
for dividends).
There are plans to merge Customs & Excise and the Inland Revenue.
The summary has been prepared very rapidly and may
contain errors for which we cannot be held responsible.
The proposals are in any event subject to amendment before the Finance Act
is passed.