Budget 2007 – Farming and Estate Summary
As Prime Minister in waiting, Gordon Brown will be well aware that a government’s prospects of re-election can be determined by how deep they have delved into the electorate’s pockets. With the UK farming sector being gradually disenfranchised, can it be any surprise that the 2007 Budget showed little compassion for the sector?
Tax Rates and Allowances
The main rate of corporation tax will reduce from 30% to 28% with effect from 1 April 2008. The small companies’ rate increases from 19% to 20% with effect from 1 April 2007, increasing to 21% from 1 April 2008 and 22% from 1 April 2009.
Increases in the small companies’ rate together with a decrease in the personal tax basic rate is intended to ensure "fairness across the tax system" removing the encouragement for small businesses to incorporate.
The most significant change to the tax rates for individuals is the basic rate band reducing to 20% from 22% with effect from 6 April 2008. The starting rate band of 10% will only apply to savings income and dividend income from the same date.
Personal allowances are increased by inflation for those under 65 but the increases for those over 65 are above inflation. In April 2011 the personal allowance for over 75s will be £10,000.
The upper earnings limit and upper profits limit for national insurance contributions (NIC) will increase above inflation over the next two years and in April 2009 these NIC limits will be aligned to the higher rate threshold for income tax purposes.