Budget summary

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Income tax

Income tax

Basic rate of income tax cut from 23%t to 22%, the lowest level for 70 years. No changes to bands or to allowances.

The standard married couple's allowance (MCA), worth £197 to those under 65, is to be abolished with effect from 6 April 2000. MCA continues to be available to those couples in which at least one spouse is aged 65 or over on 5 April 2000.

Housing market

MIRAS (Mortgage Interest Tax Relief) will be abolished from 6 April.

Stamp duty on transactions above £250,000 will be increased to 3%, to 4% for those above £500,000. No change for transactions under £250,000. The new rates apply to documents executed on or after 28 March 2000, except where it gives effect to a contract made on or before 21 March 2000.

Pensioners

The pensioners' tax allowance will be set at £5,790 this year, and for those over 75, at £6,050. The Secretary of State for Security will launch a study to develop a new pensioners' credit. Winter fuel allowances of £150 will be paid every year.

The Chancellor disappointed many pensioners' groups when he did not remove the need to buy a pension annuity by the age of 75, as some had expected.

Duties

Duty on all spirits frozen, beer increased by 1p a pint, wine by 4p a bottle. Cigarette duty increased by 25p a packet, with all revenue earmarked for the National Health Service (NHS).

Road fuel duty to rise in line with the Retail Price Index (RPI), petrol to increase by 2p a litre. Vehicle Excise Duty (VED) was frozen for all cars until March 2001. Reforms to air passenger duty. No changes to gambling taxes.

Capital Gains Tax

The long-term rate of capital gains tax for business assets was cut from 40% to 35% after one year, 30% after two years, 20% after three years and 10% after four years.

The 10% capital gains tax rate was extended to entrepreneurs who hold up to 25% of new businesses and and to owners of unquoted companies.

Employee share schemes

Employee shareholders will also enjoy the 10% Capital Gains Tax rate. Over 2,000 companies currently offer broad-based employee share schemes. In an attempt to boost this number, the Chancellor confirmed that the new All-Employee Share Ownership Plan (AESOP)will take effect in June. The popular SAYE-Sharesave and Company Share Option (CSOP) schemes will continue unchanged, alongside AESOP.

Under the new scheme employers will be able to give up to £3,000 of shares to employees, free of tax and national insurance contributions. Employees will be able to buy shares out of their pre-tax salary up to a maximum of £1,500 (partnership shares). Employers may match partnership shares by giving employees up to two free shares for each partnership share they buy (matching shares).

Shares in Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) need now only be held for three years rather than five to qualify for up front income tax relief.

Maternity Grants

The Sure-Start maternity grant for low-income mothers will be increased to £300 from £200. Lone parents with children over five will be invited to work-focused interviews, with a guaranteed income of £214.

Inheritance tax (IHT)

The nil rate band has been increased by £3,000 to £234,000 with effect from 6 April 2000. The rates of tax remain unchanged.

Gifts to charities

There were several measures designed to boost charitable giving. The new tax relief for gifts of shares to charities will cover a wider range of securities than previously announced. Non-resident individuals and companies can make Gift Aid donations. VAT zero rating has been broadened to include the sale or hire of donated goods to people who are disabled or on means tested benefits. The existing VAT exemption for fund-raising events has been widened.

Banks accounts

Bank payment systems are to be subject to competition. Banks and the Post Office will be encouraged to offer basic banking service to all.

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