2007 Pre Budget Report

Alistair Darling's first Pre Budget Report coincided with the publishing of the Comprehensive Spending Review. While the speech was concise, the accompanying Pre Budget Report notes were extensive.

• The Chancellor predicts that UK economic growth will slow from 3% this year to 2 - 2.5% next year. This is 0.5% less than Treasury forecasts at the time of the 2007 Budget. Even this rate of growth is considered optimistic by some leading economists.
• The public debt is set to increase by £4 billion, rising to £38 billion - an increase of more than 10%.
• The recent political focus on inheritance tax appears to have resonated around the Treasury and a significant increase in the inheritance tax allowance was announced for married couples and civil partners with an immediate increase from £300,000 to £600,000, rising by 2010 to £700,000.
• To balance the books however there were increases in the tax on company cars, capital gains tax, aviation tax and an updating of the rules on residence and non-domicile taxes.

Reaction to the Pre Budget Report was understandably mixed, with some disappointed at the further tax increases and others pleased with the announcement of the changes to inheritance tax.

The 2008/09 personal allowances, national insurance rates, pension benefits and tax credits were all announced after the PBR on 18 October 2007.

Please review our report on the announcements and contact us with any areas of interest or concern.

Looking for the detail?

The announcements are included in the Report Notes which can be found on the HM Treasury website - and also that of HM Revenue and Customs

Pre Budget Report

Comprehensive Spending Review

Other Announcements Not Covered in Detail

• Investment manager exemption (PBRN 07)
• Company gains on life policies (PBRN 10)
• Life assurance companies: Consultation outcomes and simplification (PBRN 11)
• Life assurance companies: Expenses relating to reinsurance arrangements (PBRN 12)
• Facilitating use of biobutanol (PBRN 27)