The key points from Gordon Brown’s 2007 Budget report are outlined below for your information.

Business owners should be aware of the following announcements:

• Capital allowances to be revamped including phasing out of industrial building allowances and plant and machinery allowances to be more commercial.
• Main corporation tax rate down from 30% to 28% from April 2008.
• Small companies rate increased to 20% for 2007-08 and then to 21% from April 2008 and to 22% from 2009.
• R&D tax credit increased from 150% to 175% for SME’s and from 125% to 130% for others.
• Minimum wage increased to £5.52 per hour (and to £4.60 for 18-21 year olds and £3.40 for 16 and 17 year olds) from October this year.
• Relief from business rates on empty offices reduced to 3 months and on empty industrial property to 6 months.

Taxpayers should be aware of the following announcements:

• The basic rate of income tax will fall from 22% to 20% from April 2008.
• Personal allowances for 2007/08 remain as announced in the Pre-Budget report.
• Duty on alcohol increases:- a) on beer by 1p/pint; b) on cider by 1p/litre c) on wine by 5p/bottle and on sparkling wine by 7p/bottle from midnight on Sunday.
• Cigarettes rise by 11p/packet from midnight tonight.
• VAT reduced to 5% on:- nicotine replacement products, and 
  house alterations so grandparents may move-in.
• Road tax on the highest polluting vehicles increases immediately to £300 and to £400 next year.
• The  higher rate tax threshold will increase to £43,000 from April 2009.
• The Inheritance Tax threshold will rise in stages from the current £285,000 to £350,000 in 2010.
• The annual capital gains tax exemption increases from £8,800 in 2006/07 to £9,200 for 2007/08.
• The personal allowance for the under 75s will rise in three stages from £7,280 in 2006/07 to £9,770 in 2011.
• The personal allowance for the over 75s will also rise in three stages from £7,420 to £10,000 by 2011.
• ISA limits raised to £7,200 of which £3,600 may be in cash from April 2008.
• A new 10% tax credit on dividends received from foreign companies where less than 10% of the company’s shares are owned and amount to less than £5,000 in a year.
• Paper tax returns for  2007-8 must be filed by 31st October 2008 but on line returns may still be filed by 31st January 2009.

Not for profit organisations and the public sector should be aware of the following announcements:

• For gift aid donations to a charity of more than £1,000, the benefits a donor can receive from the charity are doubled to 5% with a cap of £500.
• Additional funding for Childline and Parentline Plus as part of supporting families’ initiatives.
• £80 million to be made available as small grants for community organisations.
• Charities who have obtained zero rating on a new building or construction will no longer be liable for a VAT charge when there is a change of use within 10 years of the construction.
  

If you would like to speak to one of our tax experts regarding any of the issues raised in this year’s Budget, which affect you or your organisation, please contact us on: 020 7566 4000.