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Inheritance taxes cut for couples Inheritance taxes cut for couples
(about 1 hour 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.
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%. But he was accused by the Tories - who unveiled policies in all these areas last week - of being in a "panic" after their recent opinion poll surge.
The Tories said it was a "pre-election budget without an election". Mr Darling also downgraded the UK's growth forecast for 2008 by 0.5%.
READ THE REPORT class="" href="http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/09_10_07_pbr_report.pdf">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 The Conservatives accused Mr Darling of producing a "pre-election budget without an election" - after Gordon Brown's weekend decision not to call an election.
Shadow chancellor George Osborne attacked what he called a "weak and cynical" statement, saying Gordon Brown had had ten years to address issues like inheritance tax. READ THE REPORT class="" href="http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/09_10_07_pbr_report.pdf">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 href="http://www.adobe.com/products/acrobat/readstep2.html">Download the reader here class="" href="/1/hi/business/7034372.stm">See documents and speech in full
"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." Shadow chancellor George Osborne said Mr 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," he told MPs.
And he accused the prime minister of having to wait for the Tories to tell him what his vision for the country was.And he accused the prime minister of having to wait for the Tories to tell him what his vision for the country was.
Tighter spendingTighter 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's proposals came after the Tories promised at their annual conference last week to exempt estates under £1m from inheritance tax.
KEY POINTS Growth forecast cut by 0.5%Public sector net borrowing expected to come in at £38bn this year not £34bn.Inheritance tax threshold raised to £600,000 for married people or those in civil partnershipsCrackdown pledged on "non-domicile" tax payersAbolish 10% tax rate on private equity capital gainsGreen taxes on flights not passengers from 2009 Osborne attacks Budget 'panic'KEY POINTS Growth forecast cut by 0.5%Public sector net borrowing expected to come in at £38bn this year not £34bn.Inheritance tax threshold raised to £600,000 for married people or those in civil partnershipsCrackdown pledged on "non-domicile" tax payersAbolish 10% tax rate on private equity capital gainsGreen taxes on flights not passengers from 2009 Osborne attacks Budget 'panic'
They had also outlined plans to raise £3.5bn to pay for the cut with a £25,000 flat rate charge on "non domiciled" wealthy foreigners.They had also outlined plans to raise £3.5bn to pay for the cut with a £25,000 flat rate charge on "non domiciled" wealthy foreigners.
Mr Darling dismissed that idea, saying it would raise £650m before, to Tory jeers, saying he would bring forward his own measures which could see "non doms" paying a charge after seven years.Mr Darling dismissed that idea, saying it would raise £650m before, to Tory jeers, saying he would bring forward his own measures which could see "non doms" paying a charge after seven years.
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.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, although assets left to a spouse are exempt from the tax.At the moment, inheritance tax is charged at 40% on all assets worth more than £300,000 that someone leaves behind when they die, although assets left to a spouse are exempt from the tax.
Global economyGlobal economy
Mr Darling's announcement will enable married couples and civil partners to combine their allowances so when the widow or widower dies inheritance tax will not be charged on the first £600,000 of their estate.Mr Darling's announcement will enable married couples and civil partners to combine their allowances so when the widow or widower dies inheritance tax will not be charged on the first £600,000 of their estate.
On private equity, Mr Darling said from next April the government would withdraw the capital gains tax taper relief, which can be as low as 10%, and put in its place a single rate of 18%.On private equity, Mr Darling said from next April the government would withdraw the capital gains tax taper relief, which can be as low as 10%, and put in its place a single rate of 18%.
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".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 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 had to increase public sector borrowing forecasts - expected to come in at £38bn pounds this year, not £34bn.He also had to increase public sector borrowing forecasts - expected to come in at £38bn pounds this year, not £34bn.
The government's longer-term plans were set out in the Comprehensive Spending Review, which he said "will be tighter for many departments".The government's longer-term plans were set out in the Comprehensive Spending Review, which he said "will be tighter for many departments".
Among departmental budget announcements he said there would be an extra £400m for the armed forces, including cash for improved accommodation.Among departmental budget announcements he said there would be an extra £400m for the armed forces, including cash for improved accommodation.
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.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.
Health spendingHealth spending
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.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.
On health, he announced a 4% a year rise for the NHS for three years - from £90bn this year to £110bn in 2010.On health, he announced a 4% a year rise for the NHS for three years - from £90bn this year to £110bn in 2010.
But Lib Dem Treasury spokesman Vincent Cable said this fell well short of the increase recommended by Sir Derek Wanless in his 2002 review.But Lib Dem Treasury spokesman Vincent Cable said this fell well short of the increase recommended by Sir Derek Wanless in his 2002 review.
He asked Mr Darling: "Will he confirm that when the Wanless report appeared, Wanless argued that 4.4% growth was the absolute minimum required to sustain improvements in patient care?He asked Mr Darling: "Will he confirm that when the Wanless report appeared, Wanless argued that 4.4% growth was the absolute minimum required to sustain improvements in patient care?
"And that was on the assumption that the maximum degree of health service reform was achieved, which it clearly has not.""And that was on the assumption that the maximum degree of health service reform was achieved, which it clearly has not."