Budget 2008: The Wow Verdict On Darling’s First Budget

12th March 2008

Neutral Budget

Alistair Darling has delivered his first Budget with no real surprises, no real winners, not too much of any significance at all in fact. So neutral was the Budget that the Stockmarket barely reacted at all.

Uncertain economic times and pressures on public finances left the Chancellor with little room for anything but a bland budget. So called ‘Green’ taxes have been increased in order to fill a potential ‘black hole’ in the Treasury’s finances.

'Credit Crunch'

However, the biggest single factor affecting this Budget is the so-called ‘Credit Crunch’. The Chancellor has indicated that in order to reverse current inflationary pressures, expected interest rate cuts may not materialise. This means that for the foreseeable future, access to many forms of credit, such as Mortgages and Commercial Finance, will continue to be restricted and could well further hamper economic growth.

No alarms and no surprises

There was little room for surprise in the Budget as most of the key announcements were either announced in previous Budgets or were leaked to the press and plastered across the front pages the morning of the Budget. What was announced (or re-announced) was:

 

Businesses

• changes to the Capitals Gains Tax regime will go ahead as planned;
• Corporation Tax for small businesses will rise to 22% in 2009;
• the higher rate of Corporation Tax will fall from 30% to 28% as previously disclosed;
• intention to simplify the tax regime and tax calculations for smaller business;
• the Small Firms Loan Guarantee Scheme has been extended to include all small business;
• changes to the Enterprise Investment Scheme;
• a £12.5m fund has been created to encourage more female entrepreneurs; and finally
• a target has been set for 30% of all government contracts to be awarded to small businesses.

Savings, Investments and Inheritance Tax

• The overall annual investment limit for ISAs rises to £7,200, of which £3,600 can be in cash, from 6 April 2008.
• The ten pence starting rate of tax is removed for non savings income and replaced with a new ten pence starting rate for savings income with a rate limit of £2,320.
• Previous Budgets announced Inheritance Tax allowances - for 2008/09, the allowance is £312,000 for individuals and £624,000 for married couples and civil partners.
• Stamp Duty will not be applicable on Shared Ownership properties until the residents own more than 80% of the equity

Motoring and transport

• The two pence per litre increase in fuel duty previously announced by the Chancellor has been delayed until 1 October 2008.
• Vehicle Excise Duty for the most polluting vehicles increases by £100 to £400 (for petrol and diesel cars); lesser polluting cars face increases of £5.

Alcohol and tobacco

• Alcohol duty rates increase from 17 March 2008.
• The duty increases will add four pence to the price of a typical pint of beer, 14 pence to the price of a typical bottle of wine, and 55 pence to the price of a typical bottle of spirits.
• Duty on tobacco rises in line with inflation - 11 pence on a packet of twenty cigarettes.

For a more in-depth discussion of how the Budget may effect your personal situation, feel free to call the Wow team on 0845 201 1582 or e-mail info@thewowcompany.com with your queries.