Income tax drops, too
As was widely predicted, the Chancellor announced a lower income tax rate of 10%, fulfilling Labours manifesto commitment. It will apply to the first £1500 of income from Apr 6, 1999. However, the existing 20% band on the first £4300 will disappear.
The personal allowance will increase to £4335. Married couples allowance will rise in line with inflation to £1970 at 10% in 1999-2000. It will be replaced with a childrens tax credit from April 2001, worth on average about £416 a year.
The basic rate of income tax will be cut by 1% to 22% from April 2000.
Tax relief on mortgage interest remains unchanged at 10% on loans up to £30,000 for 1999/2000 but is abolished from April 2000.
The earnings threshold for national insurance will increase to £76 a week from April 2000, the first step in the Chancellors programme of aligning the NIC threshold with the single persons tax allowance.