2007 Budget Speech - A precis of the main points

• The basic rate of income tax to be reduced from 22% to 20% from 6th April 2008.
• Substantial increases in the personal allowance for those aged over 65 with, for example, those aged over 75 receiving an allowance of £10,000 by 6th April 2011.
• The removal of tax relief available on personal term assurance first introduced on 6th April 2006.
• The raising of the adult rate of the national minimum wage to £5.52 per hour from October 2007.
• Minor improvements to the working tax credit arrangements, to try to reduce overpayments.  
• Increasing the annual individual saving account (ISA) investment limits to £7,200 from £7,000 with effect from 6th April 2007.
• Increasing the annual ISA cash limit within that from £3,000 to £3,600.  
• Increasing the inheritance tax nil rate band in the year commencing 6th April 2010 to £350,000, which is much lower than many had hoped and does not keep pace at all with the increase in residential house prices.  
• Launching a campaign to encourage the giving to charities through gift aid.
• For certain housing alterations for elderly people, the VAT rate will be cut to 5% from 17.5% from lst July 2007.
• Certain over-the-counter smoking cessation products will attract a reduction in the VAT rate to 5% from 17.5%, for one year from 1st July 2007.
• An increase of 2p per litre in main fuel duty rates will take effect from lst October 2007.
• Normal increases in National Insurance contributions are comparable to previous years with the starting point for employers, employees, and self-employed being £100 per week from 6th April 2007
• Normal increases in capital gains tax annual exemption allowance with effect from 6th April 2007 to £9,200 per annum for individual taxpayers.

• From April 2007, the small companies’ rate of corporation tax will rise to 20% and will then rise by 1% in the following 2 years to a maximum of 22% by April 2009.
• The first year capital allowances for small enterprises, currently at 50% will remain so until March 2008.  This is reviewed on an annual basis.
• A new 100% investment allowance on the first £50,000 of expenditure on plant and machinery is proposed with effect from April 2008, with writing down allowances being reduced from 25% to 20% on the same date. 
• It is proposed that, from that date also, industrial buildings allowance and agricultural buildings allowance will be gradually phased out, finally being withdrawn by 2011, although it is also proposed that from April 2008 a 10% writing down allowance will be available on certain fixtures integral to a building. 
• Claims to relief under research and development schemes available to companies are being improved, rising to a rate of 175% of qualifying expenditure from 150%, which will be introduced in the Finance Bill 2007.
• Managed service companies will be required to operate and account for PAYE on all payments received by individuals providing their services through those companies after 6 April 2007. 
• The VAT taxable turnover registration threshold has been increased from £61,000 to £64,000 and the de-registration limits have increased from £59,000 to £62,000 with effect from lst April 2007.

• The simplifying of rules for capital allowances on business cars, basing the system for writing down allowances on CO2 emissions. 
• The announcement of car vehicle excise duty rates for the next three years, with increases for the most polluting cars and reductions for the cleaner cars. 
• From lst October 2007, all new zero carbon homes costing up to £500,000 will be free from stamp duty and there will be a discount of £15,000 on the stamp duty levied if the home price is over £500,000. 
• From 6th April 2008, a 2% discount will be introduced on company car tax where cars have been manufactured to run on E85 fuel. 
• From lst May 2007, for VAT purposes, the charge for private use of business fuel will be based on the CO² emissions of the car. 
• Income tax relief is to be extended on the cost of certain energy saving items installed by a landlord in a dwelling that they let.  For example, floor insulation costs incurred on or after 6th April 2007 will be a deductible expense against rental income arising.  The maximum relief is also being altered from £1,500 per building in this respect to £1,500 per property, so that each flat in a block of flats will qualify for £1,500 maximum relief compared to just £1,500 for the whole block in the past.

• The introduction of a new single penalty structure for incorrect returns across most taxes
• The linking of the enquiry window by HMRC to self assessment tax returns by reference to the date that the return is received by HMRC from the tax payer, rather than set dates.
• Treating cheque payments as only being received by HMRC once they have cleared their bank account, as opposed to now when they are actually physically received by them.  This is a move to try and encourage on line payment.
• Making mandatory the filing of PAYE in-year forms on-line, phased in from 2009.
• Filing on-line for VAT is also to become mandatory, phased in from 2010
• Encouragement to file income tax self assessment returns on line by retaining the filing date at 31st January for such filing, but shortening the date for paper returns to 3lst October, except in cases where it is not possible to file on-line.