 Isis Financial Planners' Maggie Fleming offers a quick review of Gordon Brown's March 2004 Budget.
What a boring budget! But at least Gordon was careful not to ruffle too many feathers - after all, there's likely be an election next year and he wants to stay at No. 11 (or maybe even move next door!).
There wasn't much to set the heart beating wildly. In December, he said he'd take action against self-employed traders who slashed their tax bills by incorporating their businesses and paying themselves dividends instead of a salary. Everybody expected him to impose National Insurance contributions on owner-managed company dividends. But in the end, he didn't do anything that drastic. Instead, companies will have to pay a minimum of 19% corporation tax on distributed profits after 1 st April. The existing zero rate on the first £10,000 of profits will remain, as long as the profits are retained in the company.
And he has increased the tax relief available on investments in Venture Capital Trusts (VCTs) from 20% to 40%. This will bring money in help fledgling companies.
Small businesses will also be helped by a one-year increase in the rate of capital allowances they can claim on new capital expenditure - these go up from 40% to 50%.
The Chancellor has also simplified matters for some taxpayers who currently have to complete the full 10-page self assessment tax return . In future, people with simple affairs, such as traders with low turnover and people in receipt of pensions, will only have to complete a slimmed-down 4-page version.
Feel-good Gordon even made it up with the film industry - miffed by a recent withdrawal of certain tax reliefs - by introducing a new system of tax credits. Even churches benefited from his largesse as he abolished VAT on repairs for a period of two years.
The only really revolutionary measure is one designed to counter Inheritance Tax avoidance. There's been quite a market of late for schemes whereby older married couples used complex trust structures to gift their houses to their children while continuing to live in them and so get around the inheritance tax rules. The Chancellor has now clamped down on these by imposing an annual income tax charge on the benefit of living in the property - this will be based on market rent. The new charge will catch arrangements entered into as far back as 1986!
In a similar vein, the rates of tax paid trusts will be brought into line with those paid by higher rate taxpayers, so as to make trusts unattractive to those whose only motive in setting one up is tax avoidance.
Otherwise, it was an oddly flat budget. Not very exciting but not going to upset anyone too much, either which is, of course, what he intended.
For in-depth details of the budget visit the Inland Revenue's Budget 2004 site. For a more general, macroeconomic review see the Treasury's official Budget 2004 website .
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