The base rate of income tax will be cut from April 2008 to 20p from 22p under measures announced by Chancellor Gordon Brown in his budget today. He said it was the lowest basic rate for 75 years.
Brown also said: 'I can also announce that the point at which people start paying top rate income tax will, from April 2009, not be annual income of £38,000 but £43,000; and I will align the income tax with the national insurance system with its ceiling set at the same single threshold - £43,000 - thereby creating a tax system for income that has just two rates and two thresholds.'Capital investment in schools, hospitals, security and defence and infrastructure is also set to increase from £43bn this year to £48 billion next yearHe also said that the UK had for the first time met its golden spending rule on balancing current spending and revenues and he reported a surplus of £11bn.Other measures announced include: money for investment and reform in the NHS in England will increase by £8bn this year; investment in science is set to rise from £5bn this year to £6.3bn by 2010-11; grants are to be made available for pensioners of £300 to £4,000 for installing insulation and central heating in their homes; the landfill tax will, from April next year to 2011 rise by £8 pounds each year, and the aggregates levy - which has been frozen since its introduction - will rise in April 2008 from £1.60 to £1.95 per tonne.Responding to the review into local government finance by former Audit Commission boss Sir Michael Lyons, Brown said that government will work up plans to give authorities more power to raise their own revenues through a supplementary business tax. He also said that the government will consider setting targets for reducing grants and ring fenced funding, giving authorities more spending control, however he ruled out removing caps on council tax.