What impact could this year’s budget have on you and your business? Accountants Grant Thornton looks at the key issues that could affect your finances.
Gordon Brown announced a reduction in the basic the basic rate of income tax from 22% to 20% with effect from April 2008.
However, the effect is neutralised for many by the withdrawal of the 10% starting rate for earned income and pensions.
The upper earnings limit for national insurance was aligned to the higher rate tax threshold, and an increase in that threshold of £800 above inflation in April 2009.
But by removing the starting rate and increasing the higher rate threshold could mean many taxpayers will pay less tax but pay more national insurance.
Small farming business will be hit by an increasing the lower rate of corporation tax from 19% on a staged basis to 22%.
Larger companies will benefit from the headline rate reducing to 28%.
Agricultural Buildings Allowances and Industrial Buildings Allowances (ABAs and IBAs) are set to be withdrawn by 2010/11.
There will also be a reduction in capital allowances on certain building fixtures from 25% to 10% starting in April 2008.
This will act as a further blow to the poultry market and could lead to further migration of poultry producers to overseas farms.
Vehicle Excise Duty for the most polluting cars will be increased by £85 to £300 this year and up by a further £100 next year.
This higher rate only applies to cars registered from 23 March 2006.
VAT fuel scale rates are also aligned to emissions for VAT periods beginning on or after 1 May 2007.
The Chancellor has done more to promote the use of bio-ethanol and bio-diesel – in particular by a potential 2% reduction in company car and fuel benefit and by an extension to the 20p per litre differential on fuel duty from non bio fuels.
These will be of little benefit to country-bound readers without a nearby bio-ethanol pumping station.