Chancellor's pre-Budget Report

The Chancellor, Alistair Darling, has just announced the governments spending review and pre-Budget Report. The main proposals were delivered to parliament yesterday and the general points are listed below along with their benefits.

Inheritance Tax

Altered so that married couples and civil partnerships can combine their threshold to £600,000. Individual thresholds still stand at £300,000. With the overly increased house prices we now experience, more people than ever were paying inheritance tax on property. It may drop slightly now.

Home Buyers

Proposals for new legislation could allow mortgage lenders to offer those taking out the mortgage better fixed rate deals over longer periods of time ie: 10 years

Pensions and Benefits

Pensions will rise by £5 for one person and by £7.65 for couples. This is unlikely to make a big difference to those on a state pension. The annual Child Tax credit will be increased by £175.

Tax changes

A flat rate capital gains tax rate of 18% for investors apparently aimed at making the system more straightforward, could affect many small companies, shareholders, employees and entrepreneurs by raising their tax bill from 10% to 18%. However buy-to let homeowners and second home owners who previously paid 24% tax will benefit.

Non-domicile Tax

A tax to be paid by non-domiciles who have lived here for at least 7 years. The planned flat rate charge would be £30,000 per annum. Whether non-domiciles will be prepared to pay this to remain a non-domicile remains to be seen, especially as many already pay some tax. This tax is primarily aimed at wealthy foreigners.

However as Phillip Shaw, an economist at Investec says; "Things can end up differently once the budget is actually published."