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TrainingZone Budget Special news report

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This report and summary on the March 2000 budget has been put together for TrainingZone members by our editorial colleagues working for AccountingWeb and BusinessZone.

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TrainingZone Budget Special
21 March 2000
https://www.trainingzone.co.uk

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Copyright (C) 2000 Sift plc. All rights reserved.
May be reproduced in any medium for non-commercial purposes as long as attribution is given.


Budget verdict: missed opportunities
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The background to this Budget would have been the envy of every Chancellor that has preceded Gordon Brown. A 14bn pound surplus at the Treasury, rising to 16bn pounds next year, coupled with economic growth of over 2% and low interest rates. The Chancellor is in a superb position to make some real changes.

Sadly, what we got instead was a 'steady-as-she-goes' Budget that was full of all the usual technical changes, but no fundamental reforms to capital taxes, the merging of NIC with income tax, or any grasping of the tax-simplification nettle. There were some welcome announcements for business, the public sector and those on low incomes, but no real evidence of 'thinking outside the box' to make tax easier to understand.

It is good to see more people being taken out of the tax return cycle, and businesses being encouraged to spend more on computer equipment and software. But there is no help for exporters trying to cope with a strong pound, or any attempt to make substantial reductions in the level of red tape affecting business. A simplified ISA would have encouraged more savings. Absolutely no mention of IR35 speaks volumes for the sticky wicket this has become.

Sorry Gordon, but you really must ditch Prudence and start dating someone more creative.

Gary Mackley-Smith
Budget Editor
TrainingZone
mailto:[email protected]


Budget Highlights
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Public Spending
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The National Health Service was the main winner with an injection of 2bn pounds. In addition, spending is to be increased annually by 6.1% above inflation. Schools will benefit from 1bn pounds extra funding. The chancellor also announced an extra 280 million pounds for transport and an additional 285 million pounds for tackling crime.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14385&d=101

Families
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Several measures will help families: the Sure Start maternity grant increases to 300 pounds and there will be a review into maternity pay and parental leave; mothers on maternity leave will be able to stay on Working Families Tax Credit; the Working Families Tax Credit is to rise from next April to 214 pounds a week. Pilot schemes will be introduced to get lone parents with children over five back to work.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14389&d=101

Excise Duty
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Motorists have got off lightly, a move that has been welcomed by the transport industry. Road fuel duty rose only by the rate of inflation and vehicle excise duty has been frozen. Smokers, however, have been hit with a 25p increase on a pack of cigarettes. Drinkers have bad and good news - the duty on spirits has remained the same but there is an extra 10p on a pint of beer and 40p on a bottle of wine.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14390&d=101

Business
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The Chancellor aims to promote e-commerce with lower taxes, changes to share option schemes, and investment bonuses.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14382&d=101

He has also promised to cut Capital Gains Tax to 10% within four years and will retain the 40% capital allowance rate permanently.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14374&d=101

House buying
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House buying will be more expensive as stamp duty has been increased. For properties over 500,000 pounds stamp duty will increase to 4% and for those between 500,000 pounds and 250,000 pounds to 3%. There is to be no distinction between residential and commercial properties.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14388&d=101

Savings
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The 7,000 pounds limit on ISAs is to be retained for another year.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14405&d=101

Inheritance tax
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Gordon Brown resisted any temptation to alter Inheritance Tax radically. The tax threshold is to be increased from 231,000 pounds to 234,000 pounds which will mean, according to the chancellor, that 96% of the population will be exempt.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14380&d=101

Air Passenger Duty
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There has been a lot of concern about the rates of APD and the chancellor has responded by making the system more layered. It will be halved to 5 pounds and will be abolished for flights from the Scottish Highlands and islands. There will be a new business class rate for flights outside Europe of 40 pounds while the economy rate will be unchanged at 20 pounds.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14421&d=101

Share ownership extended
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Several measures were introduced to encourage wider acceptance of employee share ownership schemes.
https://www.trainingzone.co.uk/cgi-bin/item.cgi?id=14418&d=101


Internet Monitor
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The devil is in the detail; find out more at HM Treasury:
http://www.hm-treasury.gov.uk/budget/2000/pnindex.html

Watch the Chancellor's speech in full at the BBC site:
http://news.bbc.co.uk/hi/english/audiovideo/default.stm

Read the FT's view:
http://www.ft.com/budget/

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Sift plc., 100 Victoria Street, Bristol, BS1 6HZ.
Tel:+44 117 915 9600 Fax:+44 117 915 9630
https://www.trainingzone.co.uk
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