The Chancellor, Gordon Brown, opened his speech saying, “the purpose of this budget is to lock in for Great Britain the economic stability that can and will endure”. He expects to borrow £34bn this year and his growth forecast remains at 3% - 3.5% for this year.

* Married Couples Allowance is given at the rate of 10%

TAXABLE BANDS

2004-05 (£)		2005-06 (£)
Starting rate 10 per cent	0 - 2,020	Starting rate 10 per cent	0 - 2,090
Basic rate 22 per cent	2,020 - 31,400	Basic rate 22 per cent	2,091 - 32,400
Higher rate 40 per cent	Over 31,400	Higher rate 40 per cent	Over 32,400

CAPITAL GAINS TAX

Annual exempt amount	2004-05 (£)	2005-06 (£)
Individuals	8,200	8,500
Trustees	3,950	4,250

As previously announced, there are measures to simplify the reporting of capital gains, the most significant of which is the increase in the reporting limit from proceeds of twice the annual exempt amount to proceeds of four times the annual exempt amount. This change will apply to returns for 2003-04.

NATIONAL INSURANCE CONTRIBUTIONS

ITEM	2005-06
Lower earnings limit, primary class 1	£82 per week
Upper earnings limit, primary class 1	£630 per week
Primary threshold	£94 per week
Secondary threshold	£94 per week
Employees’ primary class 1 rate	11% of £94.01 to £630 per week 1% above £630
Employees’ contracted-out rebate	1.6%
Married women’s reduced rate	4.85% of £94.01 to £630 per week 1% above £630
Blind person's allowance	12.8% on earnings above £94 per week
Employers’ secondary Class 1 rate	3.5%
Employers’ contracted-out rebate, salary-related schemes	1.0%
Class 2 rate	£2.10 per week
Class 2 small earnings exception	£4,345 per year
Special Class 2 rate for share fishermen	£2.75 per week
Special Class 2 rate for volunteer development workers	£4.10 per week
Class 3 rate	£7.35 per week
Class 4 rate	8% of £4,895 to £32,760 per year 1% above £32,760
Class 4 lower profits limit	£4,895 per year
Class 4 upper profits limit	£32,760 per year

WORKING AND CHILD TAX CREDITS
The maximum rates are as follows:-

CHILD TAX CREDIT	2005-06 £ per year
Family element (1)	£545
Family element, baby addition (1)	£545
Child element (2)	£1,690
Disabled child additional element (2)	£2,285
Enhanced disabled child additional element (2)	£920

Notes

1. Only one family element is available per family. Families are entitled to the family element and the baby addition in the first year of a child’s life.

2. As well as one family element, a family will be entitled to a child element for each child for whom it has responsibility. For each child, the child elements which are appropriate may be added together to arrive at the maximum amount available for that child.

WORKING TAX CREDIT
The rates and thresholds are as follows:-

WORKING TAX CREDIT	2005-06, (£) per year
Basic element	£1,620
Additional couple’s and lone parent element	£1,595
30 hour element	£660
Disabled worker element	£2,165
Enhanced disabled adult element	£920
50plus return to work payment, 16-29 hours	£1,110
50plus return to work payment, 30+ hours	£1,660
Childcare Element
- maximum eligible cost	175 per week
- maximum eligible cost for 1 child	300 per week
- percent of eligible costs covered	70%

INHERITANCE TAX
The nil rate band threshold has been increased by £12,000 from £263,000 to £275,000 for 2005-2006. This will rise to £285,000 for 2006-2007 and £300,000 for 2007-2008. It is anticipated that 94% if estates will not pay Inheritance Tax.

TRUSTS
As previously announced these are now to be taxed at 40% and 32.5% for dividends.

VENTURE CAPITAL TRUSTS
The annual investment limits which apply in relation to the tax reliefs available to individuals, have been raised from £100,000 to £200,00 with effect for shares acquired on or after 6 April 2004.

The rate of income tax relief has been increased from 20% to 40%. This has applied in relation to shares issues by VCT's in the tax years 2004/05 and 2005/06.

Capital Gains tax deferral relief has not been available for gains reinvested VCT shares on or after 6 April 2004.

The annual investment limit for income tax relief under the EIS, has been increased from £150,000 to £200,000 for shares issued on or after 6 April 2005.

PENSION CONTRIBUTIONS
The “earnings cap” for personal pension contributions has been increased from £102,000 to £105,600.

New pensions legislation is expected to come into effect on 6 April 2006, this will include a simplification of the rules and uniformity of all current schemes.

STAMP DUTY
The threshold for stamp duty has doubled to £120,000. The rates for residential land and property are now 1% for £120,000-£250,000, 3% for £250,000-£250,000 and 5% for over £500,000.

VAT
The turnover for VAT registration remains at £58,000.

CAPITAL ALLOWANCES
No change

CORPORATION TAX
No changes to the rates or bands of corporation tax were announced.

	TAX RATE	PROFITS
Starting rate	0	0 - 10,000
Marginal relief		10,001 - 50,000
Small Companies rate	19%	50,001 - 300,000
Marginal relief		300,001 - 1,500,000
Main rate	30%	1,500,001 or more

Legislation is going to be introduced, requiring notification to the Inland Revenue within 3 months from the start of trading.

SMALL COMPANY DIVIDENDS
No change.

TAX AVOIDANCE MEASURES
Potential tax avoidance schemes and arrangements will have to be registered with the Inland Revenue shortly after the scheme is “sold”. Taxpayers using these schemes will then be required to include the registration number on their tax returns.

For post 1986 transfers of assets effectively removing them from the IHT charge but where the original owner continues to receive free or low cost enjoyment of the asset, an income tax charge will arise with effect from 6 April 2005.

OTHER MEASURES
Duty on cigarettes is to be increased by 7 pence for a packet of 20.
A pint of beer will cost one penny more.
A bottle of wine will cost an extra 4 pence.
Duty on spirits, cider and sparkling wine has been frozen.
An additional £200 payment will be paid to households with a pensioner aged 70 or over to help offset the rise in council tax.
The increase of 1.22 pence per litre on fuel has been deferred until 1 September 2005.
Vehicle Excise Duty has been frozen for cars under 1549cc, for cars above 1549 the rate has been increased by £5 to £170.