News Archive - April 2007
Budget 2007
01/04/2007Gordon Brown's last budget as Chancellor was more of the same from the dour Scot. (click here for summary of the main points)
His period as Chancellor has witnessed a consumer credit boom and a reduction in the rate that the average person saves to the lowest level since records began in 1960. He has been widely criticised for introducing 'stealth taxes' over his term of office, none more so than for the removal of tax credits on dividends for pension funds in the 1997 budget which drastically worsened the UK's pension underfunding problem.
And so it was again, when he proudly announced a reduction in the basic rate of Income Tax from 22% to 20% with effect from April 2008. In fact, by abolishing the lower 10% rate of tax at the same time, the net result for most pay-packets was broadly the same.
However, the fall in the basic rate of tax means that from April 2008, pension savings will only attract tax relief at 20% for all those who do not pay higher rate tax.
So if you are a basic rate taxpayer currently paying £78.00 per month net into a personal pension, after April 2008 the actual amount going into your pension fund each month after tax relief will have fallen from £100.00 to £97.50.
Cheers, Gordon!