BUDGET 2008 - Summary
March 13th, 2008 by GilesBudget 2008 - how it will affect you
The Chancellor’s Budget includes confirmation of the cut in the basic rate of Income Tax to 20 pence from 22 pence, a delay to the planned increase in fuel duty, and measures aimed at tackling climate change.
Personal taxation
A number of changes announced in last year’s Budget will come into effect from 6 April 2008 (the 2008/9 tax year):
- the basic rate of Income Tax falls from 22 per cent to 20 per cent
- the 10 per cent starting rate of Income Tax is abolished
- the personal allowance increases to £5,435; the age-related personal allowances rise to £9,030 for people aged between 65 and 74, and to £9,180 for those aged 75 and over
Child Benefit, Guardian’s Allowance and Tax Credits
Child Benefit for the eldest or an only child goes up 70 pence to £18.80 for 2008/09. For other children, the amount rises 45 pence to £12.55. Guardian’s Allowance increases 50 pence to £13.45. The ‘first child’ rate increases to £20 a week from April 2009. Also:
- 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
Pensioners
The Budget announced an increase of £100 to over-80s households and £50 to over-60s households in 2008/09, via their Winter Fuel Payment.
Savings
The overall annual investment limit for ISAs rises to £7,200, of which £3,600 can be in cash, from 6 April 2008.
The ten pence starting rate of tax is removed for non savings income and replaced with a new ten pence starting rate for savings income with a rate limit of £2,320.
Alcohol and tobacco
Alcohol duty rates increase from 17 March 2008. The duty increases will add four pence to the price of a typical pint of beer, 14 pence to the price of a typical bottle of wine, and 55 pence to the price of a typical bottle of spirits.
Duty on tobacco rises in line with inflation - 11 pence on a packet of twenty cigarettes.
Motoring and transport
The two pence per litre increase in fuel duty previously announced by the Chancellor has been delayed until 1 October 2008.
Vehicle Excise Duty (VED, or ‘car tax’) for the most polluting vehicles increases by £100 to £400 (for petrol and diesel cars in the graduated VED band G. Other bands see increases of £5).
The environment
From 2009, alongside the Budget there will be a five year carbon budget setting carbon emissions; and the long-term target for emissions reductions has been increased to 80 per cent by 2050.
Specific proposals include the introduction of legislation in 2009 to impose a charge on single-use carrier bags - the money raised would go to environmental charities.
The Stamp Duty Land Tax exemption for zero carbon homes is extended retrospectively to new flats from 1 October 2007
Charities and Gift Aid
The Budget announced a package of measures aimed at increasing the take-up of Gift Aid, including the introduction of a transitional rate of 22 per cent in 2008/09.
Measures were also taken to reduce burdens on charities, including reforms to the audit process and a programme for bringing more smaller charities into Gift Aid.
Inheritance Tax and Capital Gains Tax
Previous Budgets announced Inheritance Tax allowances - for 2008/09, the allowance is £312,000 for individuals and £624,000 for married couples and civil partners.
For more information go to: http://www.direct.gov.uk/en/Nl1/Newsroom/Budget2008/DG_073037