Budget 08: The highlights

Economy:

UK economic growth is forecasted to be between 1.75% and
2.25% in 2008, lower than the 2.5% to 3% predicted in last year’s Budget.

Growth in 2009 will be between 2.25% and 2.75%, while it will be 2.5% to 3%
in 2010.

Inflation targets of 2% should be met from 2009 onwards. The
target will be missed this year but Darling did not mention what the rate for
2008 is expected to be.

Investment in public services will increase from £33bn to
£37bn by 2010 the highest level of public investment in three
decades, it was claimed.

Government borrowing will be £43bn, or 2.9%
of GDP, up from last year’s £35bn but lower than forecast in the pre-budget
report.

The government will meet its Golden Rule on borrowing. The
chancellor said that the government would only be borrowing to invest and not to
bankroll current spending.

Environment:

The proposed two pence fuel duty rise has been postponed
from April until October this year. Fuel duty would also rise by 0.5 pence per
litre above inflation from 2010.

Companies will be hit with a plastic bag tax if they fail to
voluntarily cut down plastic bag usage. Fees will be passed onto environmental
charities.

A separate carbon budget will be introduced alongside next
year’s Budget to help tackle emissions.

Low carbon emitting cars will pay no car tax for the first
year from 2009 but gas guzzlers cars will be hit by higher rates.
Capital allowances for lower emission cars will also be upped.

Revenue from plane duty, as part of the European Union
Emissions Trading Scheme. will increase by 10% in the second year of operation.

Business:

Corporate tax rate will fall from 30% to 28% as announced in
the 2007 Budget.

£60m will be made available to SMEs in
grants and the eligibility criteria will be widened to include
all small and medium enterprises.

The entrepreneurs’ relief scheme will come into effect,
benefiting 80,000 people.

The majority of small business owners will continue to pay
10% in capital gains tax.

30% of government contracts will be awarded to SMEs.

There will be no windfall tax on energy companies, but the
government wants to see a threefold increase in their social tariff investments,
up from £50m a year to £150m.

Tax for smaller businesses will be reviewed, in order to simplify
calculations and returns. It will focus on companies with under 10
employees and less than £750,000 turnover.

Charities will benefit from a transitional income tax rate
of 22%, bringing in an extra £300m through Gift Aid.

Personal:

The will be no concessions over the new £30,000 non-dom levy
coming into effect in April.

Stamp duty on shared ownership homes will not be payable
until 80% of the equity is paid.

Sin taxes:

Cigarettes will go up by an average of 11p
per packet while cigars will increase by 4p.

Alcohol taxes will rise by 6% above the
rate of inflation from this Sunday, and by 2% each year for the next four years.

The cost of a pint will increase by 4p,
while a litre of cider will rise by 3p and a
bottle of wine by 14p.

The cost of a bottle of spirits will rise by
55p per bottle, the first rise since 1996.

Smoking cessation products will continue to attract VAT
concessions.