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Budget 2004

On Wednesday 17th March 2004, Chancellor Gordon Brown delivered his eighth Budget, ‘Prudence for a Purpose: A Britain of stability and strength’. Here is a round up of Mr Browns’ main proposals:

• In terms of the impact on your pocket, Gordon Brown will be adding an extra 1p on a pint of beer, an extra 4p on a bottle of wine, and an extra 8p on a packet of cigarettes. However, he has frozen duties on spirits, cider and sparkling wines for the seventh year in a row.



• Petrol prices are set to rise by 1p per litre, with Sulphur-free petrol rising by 1.4p per litre from October 2004.

• The starting rate and the basic rate limit of tax are to increase in line with ‘indexation’ to £2020, which means that all tax payers who earn over £6765 will have a little more money in their pay-packet to play with



• The 22% rate of tax has been increased by £900 to £31,400, which means that people who earn over that limit will avoid paying tax of 40% on that amount. This could save an extra £162 a year



• People aged 65 or over will also have their personal tax allowances increased in April to £6830 for people aged 65 – 73, and £6950 for people aged 75+. This means that no one aged 65 or over will pay tax unless their income reaches £131 a week


VAT


• The VAT threshold has been raised by a further £2,000 to £58,000


ISA’s


• Gordon Brown has cut the amount that can be invested into an ISA from £7000 per tax year, to £5000 in April 2006. The investment limit for Cash ISA’s will fall from £3000 to £1000 at the same time


Pensions & Pensioners


• The lifetime cap on fund values will be increased, rising to £1.8 million by 2010. This means that by 2010, the most money that a pension pot could hold, while still enjoying a tax-efficient status, will be increased by £400,000



• From November, all pensioners over the age of 70 will receive an extra £100 a year to help offset their growing tax bills



During his speech, Gordon Brown also announced that British entry into the euro will not be reviewed again until March 2005, meaning that, for the time being, the pound sterling has at least another year left as our currency.

Here are the other highlights from this years’ budget:


• Stamp duty has been frozen



• Inheritance tax exemptions have been increased to £263,000, which means that 95% of estates would pay no tax



• Budget will reinforce the ability of the police and defence forces to counter global terrorism, with £1billion set aside for anti-terrorism spending this year



• UK economic growth forecast at 3 to 3.5 per cent this year, with 2.5 to 3 per cent forecast in 2006



• NHS to get 10% more cash each year until 2008



• Primary school Head teachers to get direct grants of £55,000 and Head teachers of Secondary schools will receive grants of £180,000 in 2005/2006 to spend how they see fit



• Education funding to rise by 4.4%



• UK inflation forecast as 1.75% this year, and 2% next year



• No freeze on Home Office or Defence budgets, however all other departments within government are to cut 5% of costs using technologies and other efficiencies



• Mr Brown announced that the UK is to borrow £37.5billion this year



• Corporation Tax and Capital Gains Tax frozen



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