Welcome to our 2007 Budget Summary
Gordon Brown presented his eleventh Budget on Wednesday 21 March 2007. This is expected to be his last before he makes a bid to become Prime Minister.
He was upbeat about the state of the UK economy and reported a budget surplus of £11 billion over the economic cycle. This surplus, together with proposed asset sales and civil service cuts, allows him to invest further in public infrastructure projects as well as in security and defence.
The speech included the usual quick fire announcements covering tax years up to 2012. A highlight for many was the reduction in the basic rate of income tax to 20%, but this is countered by an expansion in the amount of income that is subject to national insurance. Sweeping changes are also to be made to the capital allowance and corporation tax systems.
Our summary focuses on the issues likely to affect you, your family and your business. To help you decipher what was said we have included our own comments.
If you have any questions please do not hesitate to contact us for advice.
Main Budget proposals
- Corporation tax for small companies increased from 19% to 22% over three years
- Cut in corporation tax from 30% to 28% for large companies from 2008
- Reduction in basic rate income tax to 20% from 2008
- Significant increases in national insurance on earned income from 2008
- Capital allowance system reform
- Landfill tax to increase by £8 per tonne each year to 2011
- Increased Vehicle Excise Duty for all cars except the very cleanest.
Previous announcements
Some of the changes detailed in this summary have been the subject of earlier announcements. Here is a reminder of some of the more important ones.
- Increased investment limits for Individual Savings Accounts
- Restriction of the use of Alternatively Secured Pensions
- A new tax system for workers using managed service companies.
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