Budget 2007 - Impact

Wednesday, 21 March 2007 12:00

Today Gordon Brown delivered his 11th and almost certainly last Budget as chancellor - myfinances.co.uk brings you a breakdown of how it will affect your bank balance.

In a far more eventful speech than anticipated the chancellor made major changes to income tax, ISAs, and increased child and working tax credits.

The headline-grabbing measures were undoubtedly a cut in the basic rate in income tax from 22p to 20p and the removal of the 10p band.

• The chancellor announced the scrapping of the 10p band of income tax, cut the basic rate of income tax from 22p to 20p from next April, and raised the point at which you pay 40 per cent income tax to £43,000 from April 2009.

• ISA allowances were raised for the first time since their introduction in 1999, with the amount that can be saved in a cash account tax-free rising to £3,600. Overall ISA rates will increase to £7,200 for an equity ISA.

• Green measures - pensioners will be given grants of between £400 to £4,000 for the installation of insulation and central heating.

• Sin taxes: 11p more tax was put on a packet of cigarettes, 5p on a bottle of wine, 7p on sparkling wine, 1p on a pint of beer and cider. Spirits were unaffected.

• The inheritance tax minimum threshold is up £15,000 to £300,000 from April, rising to £350,000 by 2010.

• The capital gains tax allowance will be raised £400 to £9,200.

• Stamp duty is set to be removed from all "zero-carbon homes" up to a value of £500,000.

• Road tax will remain free for the least polluting vehicles, drop 30 per cent for the next least polluting cars to £35, matched upping the top band 30 per cent higher to £300 this year and to £400 next year. Other bands are to rise by £5 or £10 a year for the next three years.

• Fuel duty will rise 2p a litre for the next two years, with this year's increase deferred to October.

• Child tax credit for the first child is set to rise to £20 a week by 2010.

• A new shared equity scheme to help first-time buyers.

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