09 March 1999
in association with
positive | Key points for Farmers – negative
| Income Tax | Business
Tax | Capital Gains Tax |
| Stamp Duty | Inheritance
Tax |Other Points |
* From 6 April 2000, basic rate of income tax will be reduced from 23% to 22%
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 April 6, 1999. 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.
The Chancellor also announced that the basic rate of income tax will be cut by 1% to 22% from April 2000.
The married couples allowance is increased to £1970. It will be replaced with a childrens tax credit from April 2001, worth on average about £416 a year.
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.
Cuts of 1% in the small companies rate (those with profits up to £300,000) and the main rate of corporation tax announced last year, come into effect on April 1 this year. These will stand at 20% and 30% respectively.
The small companies rate is now 3% below the basic income tax rate, and 20% below the higher rate. This larger gap provides increased incentive for small businesses which keep profits in the business to incorporate.
First year capital allowances on plant and machinery will continue at 40% until July 2000 as the Chancellor previously indicated.
There has been no change for individuals on the major reform to CGT announced in last years Budget. So retirement relief is still being phased out from April 1999 to April 2003.
Annual exemption has been raised by inflation to £7100. Tax rates are to be aligned with those for savings income, charging gains at 20% or 40% depending on the level of incomes and gains.
The zero rate band for inheritance tax will increase in line with inflation to £231,000, a rise of £8000. The rate of tax above this threshold remains at 40%.
Potentially exempt transfers, business and agricultural property relief also stay the same.
However, new provisions apply to gifts of land after March 9 1999, where an arrangement allows the donor to occupy the land to a “significant degree” without paying a full rent and the gift is made within seven years. This is intended to block schemes such as the Lady Ingram case which recently succeeded in the House of Lords.
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