A new 10p starting rate of tax on the first pounds 1,500 of taxable income will be introduced from next month. The basic rate of tax is also being cut from 23p to 22p from April 2000. Tax thresholds will be increased in line with inflation. There will also be reform of national insurance aimed at the lower paid and the self-employed designed to take 900,000 people out of NICs altogether.
Families and pensioners
The married couple's tax allowance is being scrapped and replaced by a children's tax credit from April 2001 worth up to pounds 416 a year. From April 2000, child benefit will be increased to pounds 15 a week for the first child and pounds 10 for the second child. Parents will be entitled to three months unpaid leave for each child from this December and all mothers will be entitled to 18 weeks' maternity leave. A pounds 1bn package for pensioners includes an increased pounds 100 winter fuel allowance, increased tax breaks and minimum income guarantees.
The Deputy Prime Minister, John Prescott, is to investigate whether there is sufficient competition in the airport and water industries. The Financial Services Authority will publish league tables of the charges levied on savings, insurance and pension products and building societies will have to publish price information on mortgages. The Office of Fair Trading's budget will rise by 20 per cent and political influence over merger decisions will be reduced.
Inheritance tax and capital gains tax thresholds will rise and there will be a review of charity taxation
A new energy tax on business will be introduced from April 2001 designed to cut greenhouse gas emissions. There will also be a pounds 55 reduction in road tax for cars with the smallest engines, tax perks to encourage "green commuting" by bus and bicycle and an increase in landfill tax. From April 2002, company car tax will be linked to the car's carbon dioxide emissions.
Fuel, smoking, alcohol, gambling
Fuel taxes are increasing by more than the rate of inflation, increasing the price of unleaded petrol by 3.8p a litre and diesel by 6.14p. The price of a packet of 20 cigarettes will rise by 17.5p and 25g of pipe tobacco by 9.5p but there will be no increase in duty on wine, beer or spirits. The Chancellor also announced new measures to clamp down on smuggling. The tax on pools betting is being cut to 17.5 per cent.
Home and work
Mortgage interest tax relief (Miras), worth an average of pounds 2.50 a week, is to be abolished from April 2000 while stamp duty on the sale of properties worth more than pounds 250,000 is to increase by half a per cent. Employees are to be allowed to buy up to pounds 1,500 worth of shares a year in their own company from pre-tax income, matched by up to pounds 3,000 worth of free shares from their employer. The New Deal programme will be extended to the over-fifties with a scheme to get them back into work with a guaranteed pounds 60-a-week payment.
The Information Age
The Government is launching a pounds 1.7bn initiative to make computers available to all. A thousand computing learning centres will be created in schools, libraries and Internet cafes, 32,000 schools will be connected to the Net and 370,000 teachers computer-trained. Individual learning accounts will be extended to computer training and employees will be able to use company computers at home as a tax-free perk.
Boost for enterprise
High-tech start-up ventures will be allowed to give top managers pounds 100,000 in share options under the enterprise management incentive scheme. There will be new research and development tax credits for small businesses, increased support for high-tech venture capital funds and increased science funding for universities. The main corporation tax rate is cut to 30 per cent, the smaller companies rate falls to 20 per cent and there is a new 10p starting rate for the smallest firms.
Health and education
There will be an extra pounds 1.1bn for schools and hospitals through the capital modernisation fund, more money for Scotland, Northern Ireland and Wales and an additional pounds 170m for crime prevention.
The Budget arithmetic
The Chancellor is forecasting that inflation will remain on target at 2.5 per cent in each of the next three years while the budget surplus is forecast to total pounds 34bn over the next five years. Debt as a proportion of national income is projected to fall to 37 per cent in 2001-2002.Reuse content