2005 Budget at glance.
Chancellor Gordon Brown has now delivered his 2005 Budget, which is widely expected to be the last before the general election.
Mr Brown said that stability and fiscal discipline would continue to be his watchwords and he would balance affordable tax cuts with public spending.
Headline measures include a rise in the Stamp Duty Threshold to £120,000 – which will benefit first time buyers – a rise in the inheritance tax threshold, higher council tax rebates for pensioners and a £2,000 return to work bonus for lone parents.
politics.co.uk brings you a breakdown of the key measures in the 2005 Budget:
Family policy
- Child Tax Credit to rise by 13 per cent over next three years. Child Benefit to rise to maximum of £63 for first child and £111 for two children
-From next year, help offered for early learning in all areas for all children that need it via SureStart and new help for parents.
Refund VAT incurred by local councils on children’s services
Pensioner policy
- Pension credit to rise by 13 per cent; abolition of all benefit deductions for patients in hospital.
- Refund of £200 on Council Tax for all pensioner households (over 65s). £200 winter fuel allowance this year, £300 for over 80s
- Free local bus travel for every pensioner.
Employment
- £2,000 return to work bonus for lone parents
- £65 million for employer training pilots, new centres for vocational qualification and entrepreneurship in areas of high ethnic minority unemployment.
Personal finance
- Stamp duty threshold for house prices raised to £120,000, and threshold for Inheritance Tax will rise to £275,000 from April, and in subsequent years to £285,000 and £300,000
- Tax-free allowances for ISAs to remain in place until 2010.
Macro-economics
- Inflation at 1.75 per cent in 2004, and forecast to remain at the two per cent target in 2006.
- Domestic demand grew by 3.25 – 3.5 per cent last year, and is expected to grow between 4.25 per cent and 4.75 per cent in 2005.
- Growth of 5.25 per cent in business investment in 2004 and forecast to grow 4.25 – 4.75 per cent this year. Overall domestic investment to grow this year 6-6.25 per cent and exports to rise at over six per cent.
- Growth was 3.1 per cent in 2004, and is forecast for 3-3.5 per cent in 2005 and 2.4 to three per cent in 2006.
- Borrowing set to be £34 billion this year, falling to £32 billion, £29 billion, £27 billion, £24 billion and then £22 billion. Total of 2.6 per cent of national income, falling to 2.2, 2.0, 1.6 and 1.5 per cent.
- No further assessment on Euro entry, although fiscal position does meet the Maastricht criteria.
- £2 billion Gershon savings made, and 12,500 reduction in civil service posts.
- 50-year long term bonds to be issued from May.
Industry
- A merger of inspectorate bodies resulting in a reduction from 35 to nine – fewer inspections but higher penalties for inspection failure.
Consult on a single tax account for small business and single point of contact on tax
- New incentive amounting to £300m over 3 years to drive forward business-led regeneration.
- New guidelines on the introduction of EU regulation into UK law to minimise risk of ‘gold-plating’. Requirements for all departments to make annual reductions in burden on business
- Increase in R&D tax credit for medium sized companies, funding incentives for universities to open their facilities to business. New national network for stem cell research. New national energy research network for public and private sector
- Expansion of entrepreneur scholarships, new tax relief for low budget and large budget films and increased funding of £12 million for the Arts Council. £27 million public-private scheme to create a new National Sports Foundation.
Taxation
- One pence on beer, seven pence on cigarettes and tobacco, four pence on a bottle of wine. But, there was a freeze on taxation for spirits, cider and sparkling wine.
- Annual increase on fuel duty suspended until September. Duties frozen on alternative fuels for three years.
No changes to corporation tax, CGT, air passenger duty, CCL, company car tax
- 100 per cent VAT rebate on repairs to churches continued for three years and extended to memorials.
Public services
- £400 million extra funding for Defence and new compensation payments for those injured in the course of duty.
- Police spending to 2007-2008 will rise by £3.5 billion as against this year. Transport spending to rise by £2.4 billion, defence £3.7 billion, education £12 billion, and health £23 billion
- £1.6 billion for the school building and repair programme for primary schools in 2005, rising to £2.3 billion by 2009. School IT funding rise to £1.6 billion. £1.5 billion for refurbishment and renewal of higher education colleges over the next five years.
- Teach First programme to incentivise teaching in most challenging schools in more areas. Staying on – £75 week in Education Maintenance Allowance, special transitional help to incentivise young people to return to training.
