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Budget 2007 - how it will affect you

  • Published: Wednesday, 21 March 2007

In the 2007 Budget Report, the Chancellor, Gordon Brown announced a series of measures, including changes to Income Tax rates and Tax Credits.  

Personal tax

  • the basic rate of Income Tax falls from 22 per cent to 20 per cent in April 2008
  • the 10 per cent starting rate of Income Tax goes in April 2008, so that tax starts to be paid at 20 per cent
  • the top rate of Income Tax will rise to £43,000 from April 2009
  • the child element of Child Tax Credit increases by £150 a year
  • the threshold for Working Tax Credit increases by £1,200 to £6,420 in April 2008

Pensioners

  • pensioners under 75 will get a tax free allowance which will rise in three stages from £7,280 to £9,770 by 2011
  • over 75s will get a tax free allowance which will rise annually from £7,420 to £10,000 by 2011
  • pensioners installing insulation and central heating in their homes can claim grants ranging from £300 to £4,000

ISAs

  • the overall annual investment limit will rise to £7,200, of which £3,600 can be in cash, from 6 April 2008

VAT

  • VAT will be reduced to five per cent on over the counter sales of smoking cessation products
  • the rate of VAT for certain housing alterations for elderly people will be cut by 17.5 per cent to five per cent

Stamp Duty

  • from October 2007 all new zero carbon homes costing up to £500,000 will pay no Stamp Duty
  • zero carbon homes costing more than £500,000 will see a reduction in Stamp Duty of £15,000

Alcohol and tobacco

  • duty on beer increases by 1 pence a pint, on wine 5 pence a bottle, and on cigarettes by 11 pence

Car duties

  • fuel duty rates increase by 2 pence per litre from 1 October 2007 and increases in the next two years by 2 pence per litre and 1.84 pence per litre
  • vehicle excise duty rates include rises to £400 for the most polluting cars; clean cars in band B fall to £35 (2008-2009)

Inheritance Tax

  • Inheritance Tax Allowance will increase to £350,000 in 2010 -2011 (£300,000 for 2007-2008)

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