Here is our summary of the initial announcements in today’s Budget:
2p cut in the basic rate of income tax - from 22p to 20p effective 2008. This looks good news on the face of it but is mostly offset by:
10p increase in the starting rate of income tax - from 10p to 20p effective 2008.
2p cut in the company tax rate for large businesses - from 30p to 28p effective 2008.
3p increase in the small company tax rate - from 19p to 22p. This is phased in between 2007 and 2009 and reduces the tax savings when compared to being self employed but savings should still exist due to the self employed national insurance cost.
Assets purchased by small businesses - immediate tax relief on cost rather than it being spread over a number of years, effective 2008.
Road tax - increased for gas guzzling cars (to £400) and decreased for green cars (to £35).
Cigarettes up 11p - per packet of 20.
Beer up 1p - per pint.
Petrol up 2p - per litre, from 1 October 2007.
VAT registration limit - increased to £64,000.
ISA allowance - increased to £7,200 ( upto £3,600 can be in cash) effective 2008.
Inheritance tax threshold - increased to £300,000.
1 comment so far ↓
Looks like typo in email ‘3% rise for small businesses’. Should be ‘3p rise’. Of course, this is actually a rise of nearly 16% rather than the suggested 3%.
If the small business rate is going up to 22p in the £ and the personal basic rate is coming down to 20p in the £, some might think it will be more tax efficient to dis-incorporate but I’m sure it will remain tax efficent to pay dividends rather than salary because of the NI charges.
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