Budget highlights

In his eighth Budget the Chancellor Gordon Brown delivered some surprises and, as usual, confirmed many of the changes already announced over the past few months.

‘I propose to freeze rates’ was a common theme throughout the speech with many rates, including income tax and national insurance contributions, staying the same and allowances increasing by statutory indexation.

• Personal allowances for those aged 65 and over will increase in line with earnings.


• The single universal tax regime for all pensions is delayed until April 2006.


• The company car fuel benefit amount is unchanged. There will be a new tax regime for company vans.


• The government is consulting on phasing out the payment of working tax credit by employers and replacing it with direct payment to employees.


• Employer-contracted childcare and employer-provided childcare vouchers up to £50 a week will be exempt fro tax and national insurance from April 2005. In addition childcare provided by foster carers will be eligible for tax credit support.


• A grant will be available to employers with fewer than 500 employees who set up new payroll giving schemes from April 2004.


• Companies will be chargeable to corporation tax at a minimum of 19% on profits distributed to non-company shareholders.


• First year capital allowances on plant and machinery for small businesses will increases from 40% to 50% although the 100% allowances for computer expenditure end after 31 March 2004.


• VAT registration and deregistration thresholds and the turnover ceiling for cash accounting and annual accounting schemes have been increased.


• The inheritance tax threshold will increase from £255,000 to £263,000. The capital gains tax annual exemption will increase to £8,200.


• There are measures to clarify and amend stamp duty land tax and to modernise the taxation of trusts.


• The tax rate for trusts will increase from 34% to 40% (25% to 32.5% for dividends).


• There are plans to merge Customers & Excise and the Inland Revenue