Budget overview

by Sarah Modlock

16 March 2005

The Chancellor has got Budgets down to a fine art now, having held aloft the red box for the ninth time. But this year's rises and cuts are still about as fun as a visit to the dentist. There was more political pressure than usual on Gordon Brown and his old friend 'prudence', as this is his last Budget before the election. Opposition leader Michael Howard has dubbed it a 'Vote now, pay later' Budget. So after trimming away all the parliamentary puff, what really matters to the man and woman in the street?

Your home

•  Stamp duty thresholds doubled to £120,000 benefitting first-time buyers.

•  Inheritance tax currently starts being paid on estates worth £260,000 - that will rise to £275,000 this year, £285,000 next year and then to £300,000.

Your vices

•  Cigarettes will go up by 7p per packet, in line with inflation from 6pm today. Gordon Brown said the rise was 'for public health reasons'.

•  There will be an annual inflation rise of 1p on a pint of beer and 4p on bottle of wine but duties on cider and sparkling wine will be frozen. Duty on spirits was frozen for the eighth budget in a row - the longest freeze in almost half a century.

Your Car

•  Petrol duty inflation rise postponed until 1 September due to high oil prices.

•  The tax levy is frozen for company cars.

Your taxes

•  Personal income tax allowance to be raised in line with inflation.

•  No change in capital gains tax, VAT, corporation tax, air passenger tax, insurance premium tax, climate change levy and aggregates levy

Good news for..

•  UK plc - growth forecasts for 2003 have come good in defiance of many predictions, at 3.1%. The Chancellor added that Britain 'is enjoying its longest period of sustained economic growth since records began in 1701'. He predicted the economy would grow by 3% to 3.5% this year and 2.5% to 3% next year.

•  Investors - tax breaks on ISAs extended until 2010.

•  Parents - child tax credit will rise by 13%, in line with earnings, over next three years. Child benefit will rise to a maximum of £63 for the first child and £111 for two children. From next month, there will be £2,000 return to work bonuses available to single parents. Help is also promised for children's centres and primary schools.

•  Euro-sceptics - Mr Brown ruled out a further assessment of the five economic tests for euro entry.

Bad news for...

•  The elderly - pensioners are to get a council tax refund of £200 and free local bus travel from next year. But no increase on the State pension.

•  The future - experts say that taxes will have to rise after the election in order to fund the Chancellors promises.