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ITN
Darling delivers 'tough' Budget
Darling delivers 'tough' Budget
Alistair Darling's first Budget could be the toughest one we have seen in around 20 years, writes Blick Rothenberg senior tax adviser Matt Coward.Against a difficult economic backdrop, the Chancellor downgraded his economic forecasts by around 0.5 per cent this year and by around 0.75 per cent in 2009.Most people will feel the pinch this year, with personal allowances rising only by last year's measure of inflation, but Mr Darling confirmed that inflation will exceed the Bank of England's target this year - that means we are all a little worse off.There are particular losers. He confirmed the reduction in the basic rate of income tax from 22 per cent to 20 per cent from April, but also confirmed the abolition of the starting rate of tax of 10 per cent.The result is that a taxpayer on the national minimum wage will be around £2 a week worse off from the start of April. It may well be that such taxpayers may be in receipt of child tax credit and working tax credit, but this a rather unexpected consequence.Further up the income scale, all employees earning over £41,000 per annum will be around £10 per week worse off as a result of national insurance changes.It is difficult to see that business - particularly smaller businesses - will be pleased with the measures, most of which were trailed last October and confirmed today.Many business owners will still face an increase in the rate of tax on disposals of their businesses from 10 per cent to 18 per cent.Companies, where family members are employed in the business, may see an increase in their tax bill.The changes to the taxation of non-domiciled individuals were confirmed with effect from April 6, 2008 - whether or not the rumoured flight of these people from the City of London will take place remains to be seen.It might just be described as a Green Budget - but only from next year. Many green changes (lower Excise Duty for lower polluting cars) are deferred until 2009, and a plastic bag tax will be consulted on rather than being introduced immediately.The 2p a litre increase in petrol duty is confirmed, but postponed until October, which is good news for motorists struggling with record pump prices.There was very limited scope for giveaways this year, though the increase in pensioners' winter fuel allowance from £200 to £250 is to be welcomed, and £300 to £400 for the over 80s.Significant uprating of child benefit does not take place until next year.Charities are potentially worse off from April as tax relief on charitable contributions reduces as the basic rate reduces. To ensure that charities are not too much out of pocket, a fund has been announced so that the Government will top up contributions, but for a limited time only.It's the first time in recent memory that the Government has increased alcohol duties in excess of inflation. This year the increase is around 8 per cent.For further Budget news go to www.blickrothenberg.com.© Independent Television News Limited 2008. All rights reserved.
ITN | March 12, 2008
