CHANCELLOR GORDON Brown has unveiled his ninth Budget with a broadside at critics of his economic management, claiming that Britons had 50% more personal wealth now than they did when Labour came to power in 1997.
Alun Powell, senior economist at HSBC, said the Chancellor‘s proposals were “fairly neutral” for the economy as a whole, mixing the theme of long-term prudence with some short-term sweeteners in the run-up to the General Election, widely expected in May.
“At 3.25% Mr Brown‘s predictions for this year‘s growth does look a little high, but he‘s got a strong track record, so ignore him at your peril.
“If he‘s right, we may well see the Bank of England putting up interest rates to keep inflation down.
“I would expect a 0.25% rise soon, another in the summer and even another after that. That could cause a marginal strengthening of the pound.”
Farmers are most likely to benefit from the pledge to scale up tax credits and raise the threshold for inheritance tax liability, according to Carlton Collister, senior tax manager for Grant Thornton.
“Tax credit would apply to many farming families on lower incomes. Even though they are very asset rich, the tax credit won‘t take account of those assets as long as they are used in the business.”
The Chancellor is also raising the threshold for inheritance tax to £300,000 by April 2008, with steps of £275,000 and £285,000 along the way.
Mr Collister said the higher allowance would help farmers that have diversified away from mainstream farming and built up assets that are not subject to farming‘s IHT breaks – letting out farm workers‘ cottages, for instance.
Farming families could also benefit from the doubling of the stamp duty threshold to £120,000 for residential property transactions.
And on fuel prices, the usual duty increase has been deferred until September, when it will rise by 1.22p/litre for road fuel and red diesel alike.
Finally, the rate of duty on alcoholic drinks has seen another hike: beer and wine by the glass will become 1p more expensive, while a bottle of wine will cost 4p more.