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05:53 on Tuesday
10 February 2004

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Chancellor Gordon Brown has been bracing the nation for a number of weeks against the inevitability of us having to pay for the improvements we demand in the National Health Service. It was just a question of who was going to be on the end of Gordon Brown's boot.

Well, now we know. Almost every working person in the country will pay as will every employer who pays him.

This budget was never about how we would be affected during the current tax year; we knew that to a great extent last November. It was about what he would do in future years and he surprised very few people by increasing the rate and scope of National Insurance Contributions.

Rates will be increased by 1% across the board from April 2003. This will hit employers, self-employed and employees alike. With UK businesses already working to very tight margins, this additional burden will inevitably lead to higher prices, a double whammy for the consumer! He also removed the upper earnings limit for employee contributions. Higher paid employees will pay an additional 1% on the top slice of their earnings leaving Mr Brown with plenty of scope for further increases in the future.

Although we have known the tax rates and National Insurance rates since last November, the Chancellor always waits for budget day to announce the duty on alcohol, cigarettes and fuel. There were no real surprises here, the current exorbitant rates were frozen on alcohol and fuel and increased by 6 pence on a packet of 20 cigarettes, another boost to the Belgian tourist industry!

Bingo players may be better off in future if proposals to shift the tax burden from the players to the companies are approved. One wonders to whom the companies will pass on their additional costs. Could it be the players?

Mr Brown also announced a reduction in the duty on beer produced by micro-breweries, intimating that beer would be 14 pence a pint cheaper in time for the World Cup. Don't be fooled: although 90% of breweries will be affected, they produce less than 1% of the beer drunk in pubs!

Most of us will have slightly more money in our pockets this year than last. Next year we will have to tighten our belts but at least employers and employees have a year to prepare for it. Most people do not mind the proposed increases to National Insurance Contributions as long as they see a marked improvement in the National Health Service and further improvements throughout the education system. However, if this improvement is not significant, Mr Brown may have to brace himself against the voters' boot before too long.

Although most of us will be only a few pence or, at best, a few pounds a week better off this year than last, to see how you will be affected, refer to the table below.

Situation

Income

Gain

Single employee

10,000

33

 

20,000

33

 

40,000

85

Married couple, one employee

10,000

33

 

20,000

33

 

30,000

85

Married couple, both employees

20,000

66

 

40,000

66

 

80,000

170

Single pensioner

10,000

26

 

20,000

62

 

40,000

126

Pensioner couple

10,000

0

 

20,000

68

 

40,000

134

For more help and information visit
www.ietaxguard.co.uk

April 2002

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