|
|
|
Budget News from Condie
& Co., Chartered Accountants |
|
|
|
|
Budget triggers dawn of "knowledge
economy"
|
| Britain's future hinges on its
ability to become a knowledge economy. This is
the clear message to the country's small
employers from Gordon Brown's 1999 Budget. |
| The Chancellor said that the
future growth of the economy will be determined
by the effort employers expend on nurturing
talent. For this reason, the Budget will enable
employers to contribute tax-free to Individual
Learning Accounts, which will encourage staff to
develop their skills. |
| Gordon Brown also boosted the
entrepreneurial sector by announcing cuts in
corporate tax rates, both for large businesses
and small. This means that from April 2000 small
firms making profits of up to £10,000 will have
a starting rate of corporation tax of 10 per
cent. |
|
|
| The Budget also introduced the
incentive for employees to buy shares from
pre-tax income, a move intended to strengthen the
bond between workers and their employers. |
| To help balance the books, the
Chancellor increased Insurance Premium Tax,
taking the rate to 5 per cent. Not a tax increase
that will grab the headlines, perhaps, but if you
pay £500 per year in premiums, it means your tax
bill will go from £20 to £25. Businesses will
in future also be penalised for excessive use of
energy resources. |
| The administrative burden
attaching to a number of the Chancellor's other
measures is also expected to impact in the small
business community. |
|
|
 |
| William Hague pointed out the
previous use of 'stealth' taxes on business and
suggested that the detail of the announcements
might yet reveal increased tax burdens. Mr Brown
remains bullish about the overall prospects for
business, but he inevitably remains at the mercy
of economic conditions - any sudden downturn in
the global economy could quickly render Mr
Brown's best efforts irrelevant. |
|
|
Income Tax
and Personal Savings
|
| After years of promising, the
starting rate of income tax for 1999/2000 has
been cut from 20 per cent to 10 per cent, for the
first £500 of taxable income. However, taking
everyone by surprise, the Chancellor also
announced that the basic rate of tax would be cut
from 23 per cent to 22 per cent from April 2000.
Personal Allowances for 1999/2000 will rise in
line with inflation. The basic personal allowance
will be £4,335, and higher rate tax at 40 per
cent will apply over the basic rate limit of
£28,000. Age-related personal allowances will be
increased by up to £200 more than statutory
indexation. |
| The value of the basic married
couple's allowance (MCA) |
|
|
| is reduced from £285 to
£197. MCA (and other related allowances) will be
abolished for people aged under 65 from April
2000, but will be preserved for couples where at
least one spouse is aged 65 or over on 5 April
2000. |
| These moves are part of a
three year package to reform the structure of
income tax with the aim of improving work
incentives and helping both pensioners and
families with children. A new children's tax
credit will be introduced from April 2001; this
will be available to all families with one or
more children, and will be worth up to £80 per
week. National insurance contribution starting
points will rise: from |
|
|
| April 2000 employees will not
have to pay contributions on earnings below £76
per week and from April 2001, there will be full
alignment with the personal tax allowance,
estimated at £87 per week. The upper earning
limits for employees will be correspondingly
increased. |
| National Savings will
introduce new pensioner bonds which will give the
security of a guaranteed income, without having
to lock away savings for five years. |
| The maximum level of earnings
on which most pension scheme premiums attract tax
relief is to go up by £3,000 to £90,600 from 6
April 1999. |
|
|
|
Articles
| Publications
| Site Map
| Search | About Us
| Services | Careers
| Contact Us
Condie
& Co accepts no responsibility for any loss resulting from
reliance on information contained on this site.
|
