Brown Delivers Election Budget

by Jason Gorringe, for LawAndTax-News.com, London

17 March 2005

Delivering his ninth Budget on Wednesday, UK Chancellor Gordon Brown made a clear pre-election bid to please older Labour voters, hoping to retain their loyalty in May.

Among the measures designed to appeal to the the so-called 'grey vote' were an increase in the lower stamp duty threshold to £120,000, and an increase in the level at which inheritance tax kicks in on estates from the current level of £260,000 to £275,000, increasing again in 2005 to £285,000 and then to £300,000.

Tax credits for parents and pensioners were extended, and income tax and national insurance levels were left unchanged, although it was revealed that personal income tax allowances will be increased in line with inflation. The Chancellor additionally announced that tax breaks on ISAs would be extended until 2010.

Moving on to matters of interest to the UK's business community, Mr Brown revealed that he would be freezing corporation tax, capital gains tax, air passenger tax, insurance premium tax, and the climate change, aggregates and company car levies at their current rates.

He also promised to reduce the burden of small business tax administration with the development of a single tax account covering both VAT and income tax.

A reduction in the number of investigative bodies targeting businesses from 35 to nine was promised, and a new risk-based formula for deciding which businesses are targeted by government inspectors was unveiled. However, the Chancellor warned that tougher penalties would be put in place for companies which transgress UK laws.

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