UK Budget Update 1, 2005-2006

Good news for first-time home buyers today as Gordon Brown unveils his March budget changes.

Details of stamp duty and other tax changes are summarised in the articles that follow.

Tax rates and allowances 2005-06

Income Tax - No change in rates of tax. Tax bands increased in line with inflation.

Income Tax Allowances - personal allowances

Single persons:

Under 65 - £4,895 (2004-05 £4,745) Age 65 to 74 - £7,090 (2004-05 £6.830) Age 75 and over - £7,220 (2004-05 £6,950)

Married Persons:

Aged less than 75 (born before 6 April 1935) £5,905 (£5,725 2004-05) Aged 75 and over £5,975 (£5,795 2004-05)

(Subject to restriction for earnings in excess of £19,500 (£18,900 2004-05)

Blind Person's Allowance £1,610 (2004-05 £1,560)

Capital Gains Tax - Annual tax exempt amount.

Individuals £8,500 (£8,200 2004-05) Most Trusts £4,250 (£4,100 2004-05)

Gains on sale of principal private residence will continue to be exempt from capital gains tax.

Corporation Tax - no changes to rates.

Inheritance Tax

The government is to increase the value of exempt estates to £300,000 over the next three years. The relevant changes are:

From 6 April 2005 the limit is increased to £275,000. From 6 April 2006 the limit is increased to £285,000, and From 6 April 2007 the limit is increased to £300,000.

The present limit for 2004-05 is £263,000.

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Company car fuel benefit charge - will be frozen at £14,400.

Company Car Tax - minimum charge will be applied on vehicle emissions equivalent to 140 grams per kilometre of CO2.

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Increases in "Sin Taxes"

From 6pm 16 March 2005:

• Cigarettes - 7p on packet of 20


• Cigars - 3p per packet of 5


• Hand Rolling Tobacco - 8p per 25g.

From midnight on 20 March 2005:

• Beer - 1p per pint


• Wine - 4p per 75cl bottle


• Spirits, sparkling wine, cider - no change

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Child and Working Tax Credits

Child element of CTC will increase by £65pa to £1,690pa. Other elements of the tax credits will rise in line with inflation.

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VAT Changes from 1 April 2005

Increased turnover limits for registration and deregistration:

• Registration - turnover threshold increased to £60,000. (£58,000 2004-05)


• Deregistration - turnover limit increased to £58,000. (£56,000 2004-05)

No change in 17.5% standard rate of VAT.

Quick links: Personal and Business Tax Accountancy