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Inheritance taxes cut for couples Inheritance taxes cut for couples
(21 minutes later)
Chancellor Alistair Darling has doubled the inheritance tax threshold for married couples to £600,000 - and said it will rise to £700,000 from 2010.Chancellor Alistair Darling has doubled the inheritance tax threshold for married couples to £600,000 - and said it will rise to £700,000 from 2010.
He also targeted private equity bosses and "non-domiciles" in his pre-Budget report - and pledged to switch green air taxes to flights, not passengers.He also targeted private equity bosses and "non-domiciles" in his pre-Budget report - and pledged to switch green air taxes to flights, not passengers.
Schools and hospitals will get more cash than expected but growth forecasts for 2008 were downgraded to 2-2.5%.Schools and hospitals will get more cash than expected but growth forecasts for 2008 were downgraded to 2-2.5%.
The Tories said it was a "pre-election budget without an election".The Tories said it was a "pre-election budget without an election".
Shadow chancellor George Osborne said it was "weak and cynical" pre-Budget report and asked if Mr Darling had planned to reform inheritance tax before the Tories unveiled their own proposals last week.
Tighter spending
Setting out his plans, Mr Darling said Tory plans to charge a flat rate of £25,000 on non-doms - people who register abroad for tax purposes - did not add up.
He said he would consult on early legislation on non-domiciled taxpayers, as a first step introducing a charge after seven years, then a higher rate after 10.
READ THE REPORT Pre-Budget Report and Comprehensive Spending Review 2007 in full [1.5MB] Most computers will open this document automatically, but you may need Adobe ReaderREAD THE REPORT Pre-Budget Report and Comprehensive Spending Review 2007 in full [1.5MB] Most computers will open this document automatically, but you may need Adobe Reader
He also said he would prevent people claiming they were out of the country when they were actually in the UK - and from disguising income as capital. These measures would raise an average of £650m, he said. Shadow chancellor George Osborne said it was "weak and cynical" pre-Budget report.
Mr Darling also set out the government's Comprehensive Spending Review, which he said "will be tighter for many departments". He said Gordon Brown had had ten years to address issues like inheritance tax.
"Now a week after we put forward our plans the prime minister and the chancellor are scrabbling around in a panic trying to think of something to say."
And he accused the prime minister of having to wait for the Tories to tell him what his vision for the country was.
Tighter spending
Mr Darling's proposals came after the Tories promised at their annual conference last week to exempt estates under £1m from inheritance tax.
Mr Darling, however, dismissed Tory plans to pay for the cut with a £25,000 flat rate charge on "non domiciled" wealthy foreigners - saying it would raise just £650m, not the £3.5bn that the Tories claimed.
But to Tory jeers, he then said he would be bringing forward his own measures to ensure that the "non doms" were made to "pay their fair share".
Mr Darling said that his inheritance tax proposals would mean that 97% of estates would be exempt while leaving the government with £2bn more to invest in schools and hospitals.
At the moment, inheritance tax is charged at 40% on all assets worth more than £300,000 that someone leaves behind when they die, rising to £350,000 from 2010, although assets left to a spouse are exempt from the tax.
Global economy
Mr Darling's announcement will enable married couples and civil partners to combine their allowances after one partner dies.
When the widow or widower dies, the change means inheritance tax will not be charged on the first £600,000 of their estate.
On the wider economy Mr Darling said the background to the report was one of "increased international economic uncertainty and a more fragile global environment".
He said the fall-out from the global credit crunch meant UK economic growth in 2008 would be 0.5% lower than previously predicted - but that it would bounce back to its expected rate of 2.5%-3% in 2009 and 2010.
He also set out the government's Comprehensive Spending Review, which he said "will be tighter for many departments".
He said there would be an extra £400m for the armed forces, including cash for improved accommodation.He said there would be an extra £400m for the armed forces, including cash for improved accommodation.
On Tuesday morning Alistair Darling told the Cabinet that the economy remained strong and well positioned to deal with increased global economic uncertainty. A new single budget would also bring together the work of the police, the security services and all parts of the government responsible for addressing the threat from terrorism.
Spending known It will rise every year over the next three years to £3.5bn a year, representing a trebling in cash terms in a single decade, he said, including £700m over the next three years for Home Office anti-terrorist work.
In an interview with the Financial Times last week, Mr Darling said there would undoubtedly be an effect on Britain from the "credit crunch" experienced in the US.
Spending reviews detail how much money the government will put into schools, hospitals and other public services.
HAVE YOUR SAY In a time of increasing global instability, defence spending needs to be a priority Bryan McC, UK Send us your comments
Mr Brown had already said that education spending in the UK will rise from £77.4bn in 2007/08 to £90bn by 2010/11.
Since 2002 the NHS has been given record annual funding increases of about 7%. There is speculation this will slow to between 3% and 3.5% by 2011/12.
The prime minister had already announced an extra £7.7bn for defence and some departments have agreed to a 5%-a-year real-terms cut over the CSR period - including HM Revenue and Customs and the Department for Work and Pensions.