Budget 2002 - Guide
Previous Budget measures
Published: March 18 2002 17:46GMT | Last Updated: April 17 2002 19:40GMT

Business measures   Direct taxation   The elderly   Environmental measures   Indirect taxation
Property   Savings   Transportation measures

1998 1999 2000 2001 2002
Direct taxation
Income tax
Income tax allowances raised in line with inflation New 10p income tax rate to apply to the first £1,500 of taxable income replacing the existing lower rate of 20p

The basic rate of income rax cut by 1p to 22p with effect from April 2000		 Marginal changes to income tax bands 10p tax band is widened from £1,520 to £1,880

22p tax band is increased by £1000 to £29,400 a year		 No change
National insurance contributions
1998
Return to employer NIC contribution bands		 1999 NIC contribution brackets raised NIC contribution brackets raised again in 2000 NIC contribution brackets raised NI contributions increased by 1 per cent for employers, employees and the self-employed.
Married couples allowances
Tax value of married couples allowance cut from 15% to 10% - starting 1999 Married couple's allowance to be stopped from April 1 2000 - - -
Personal allowance
- - - Basic personal allowance increased by £150 to £4,385.

Allowance increased for those over 65 years to between £5,990 and £6,260, with an income limit of £17,600		 Personal tax allowances frozen at £4,615, except for pensioners.
Family tax credits
New tax credit system starting from October 1 1999. This would guarantee a full-time worker with a family an income of at least £180 a week, with no income tax on earnings below £220 a week Announcement of a new children's tax credit to be introduced from April 2001 Children's tax credit to come in at £8.50 a week Children's tax credit increased to £10 a week. An additional £10 a week to be given for the first year of any child born after April 2002. Details of the new child tax credit to be announced. The credit will integrate three elements of child-related credits - working families tax credit, child allowances of income support and children's tax credits - into one allowance.
Child care
Family tax credit allows parents to claim back up to 70% of child care costs (up to a maximum of £100 a week for the first child and £150 for two or more children New childcare tax credit set at a maximum of £70 for one child and £105 for two as part of the working families tax credit - Childcare tax credit to rise to £135 a week for one child and £200 for two or more children. No change
Child benefit
Increase in benefit by £2.50 a week for the first child from April 1 1999 Increase in benefit to £15 a week for first child and to £10 a week for subsequent children Child benefit to be £15.50 from April 2001 - No change
Maternity pay
- - - Maternity pay to be increased in stages from £60 a week, rising to £75 a week in 2002 and then to £100 in 2003.

Statutory leave extended from 18 weeks to 26 weeks.

Two-week statutory paternity leave to be introduced at £100 per week, to be paid for by the government.		 No change
The elderly
Minimum income
  Minimum income guarantee of a single pensioner raised to £78 a week, pensioner couples a minimum of over £121 a week Minimum income guarantee of a single pensioner raised to £82 a week and to £90 a week for those over the age of 80

Pensioner couples a minimum of over £127 a week and to £137 a week for the over-80's		 Basic single person's pension to rise by £5 a week to £72.50 in April 2001 and to £75.50 a week in 2002. For couples pensions will rise by £8 a week to £115.90 in April 2001 and £120.70 a week in 2002 Working families with children will have a guaranteed minimum income of £237 a week. And for the poorest single pensioner, extra help will guarantee a minimum income this year of £98 a week and from next year at least £100 a week.
Pensioner tax allowance
- Allowance raised for single pensioners to £5,720 and for couples to £15,000 Allowance raised for single pensioners to £5,790 and at £6,050 for those over 75 From 2003 Pensioners' tax allowances to be linked to earnings. Age-related income tax personal allowances for 2003-04 will increase by more than the rate of inflation. For a pensioner over 65 the first £6,610 of income will be free of tax. For those over 75, the allowance is increased to £6,740. No pensioner aged 65 or over will pay tax on income of less than £127 a week.
Winter fuel allowance
- Allowance raised from £20 payment to £100 payment Allowance raised from £100 payment to £150 Winter fuel allowance at £200 for Winter 2000/2001 Allowance will be paid this year at £200 and in every year of this Parliament.
Savings
- - ISA limit for 2000/01 £7000
Earnings ceiling for income support raised		 Tax free limit for ISA savers to rise to £7,000 a year No change
Indirect taxation
Cigarette duty
Duty increase adds 21p to price of 20 cigarettes from December 1 1998 Duty increase adds 17.5p to price of 20 cigarettes - a rise of 5% above inflation Duty raised by 25p per packet of 20 from March 21 2000 - the extra revenue ringfenced for the NHS Duty raised by 6p per packet of 20 6p more on a packet of cigarettes.
Alcohol duty
Duty raised on wine by 4p per bottle, on beer by 1p per pint and spirit duty frozen Duty on wine, beer and spirits frozen Duty raised on wine by 4p per bottle, on beer by 1p per pint and spirit duty frozen Duty on wine, beer and spirits frozen Village pubs and breweries to see duty on their own beer halved with cuts equal to 14p off each pint. These measures will be introduced before football's World Cup.
Fuel duty
1998
As a result of the fuel escalator, fuel tax rise of 4.4p per litre for unleaded petrol from March 17 1998. Diesel increases by 5.4p per litre		 Rise in duty due to fuel escalator at 6% Fuel escalator removed. No duty rise beyond the automatic inflation rise of 2p per litre. Ultra-low sulphur petrol - fuel duty set at 1p per litre below other petrol from October 1 2000 Freeze on all road fuel duty and other duties, with a 2p reduction in ultra low sulpher and unleaded petrol. A 3p reduction in low sulpher diesel, both affective from March 7, 2001.

Duty on road fuel gases will be frozen until 2004.		 Freeze on fuel duty for a second successive year.
Transportation measures
Vehicle excise duty - cars
- VED rate for smaller cars cut by £55 from June 1 1999. Other rates to be increased in line with inflation New VED rates from March 1 2001 - however rate extended to all cars at 1200cc or below VED rate for cars under 1549cc reduced by £55 backdated to November 2000. VED reduced by £25 for the least polluting cars and up to £35 for motorcycles.
Vehicle excise duty - lorries
- VED rate frozen for 98% of lorries, for lorries and buses with clean engines - fee reduced by up to £1,000 VED for 38 tonne class and 41 tonne class lorries cut by £500; 40 tonne class lorries rate cut by £1,800; all other heavy lorry rates frozen 50% reduction in VED for lorries and VED abolished for tractors. VED reduced by £55 for the least polluting trucks.
Public transport investment
1998
An investment of at least £500m additional money into public transport, introduction of £50 annual rural transport fund		 Increase for rural transport fund of 20% over the next two years bringing funding total to £120m
Company car taxation to be recast from 2002		 - - No change
Environmental measures
Landfill charges
1998
Rate increased from £7 to £10 per tonne from April 1 1999		 Increase of £1 per tonne a year from current £10 per tonne - - No change
Climate change levy
- Climate levy introduced on business use of energy from April 1 2001. This measure introduced on a neutral revenue basis as employers' national insurance contributions cut from 12.2% to 11.7% NIC reduction to 11.9% because of climate change levy reliefs - Green power stations exempted from levy.
Property
Miras (Mortgage interest tax relief)
1997
Tax relief cut from 15% to 10%, effective from April 1998		 Announcement that Miras to be abolished from April 2000 - - -
Stamp duty
1997
Duty increased to 1.5% on properties over £250,000 and 2% on properties over £500,000

1998
Duty increased by half of 1% to 2% for properties costing over £250,000 and by 1% to 3% for properties over £500,000		 Duty increased by half of 1% to 2.5% for properties costing over £250,000 and by half of 1% to 3.5% on properties over £500,000 Duty increased by half of 1% to 3% on properties costing over £250,000 and by half of 1% to 4% on properties over £500,000 - Stamp duty abolished in certain designated deprived areas.
Business measures
Corporation tax
1997
Tax cut by 2% to 31% (21% for small businesses), this measure backdated to April 1 1997

1998
Tax cut by 1% to 30% (20% for small businesses), to come into force on April 1 1999		 - Double tax regime recast from April 2001
Improved R&D allowances for small/medium sized companies		 New tax relief promised for intellectual property and goodwill. Various consultations on corporate capital gains on shareholdings The starting rate of corporatation tax cut from 10 per cent to zero, but small companies with taxable profits of less than £10,000 will be exempt. Flat rate of VAT for businesses with turnover of up to £100,000 a year, and later for businesses with turnover of up to £150,000.
Capital gains
- - Capital gains rates for business assets cut by 5% to 35% after one year. Rates drop to 30% after two years, 20% after three years and 10% after four years From April 1 2001 intention to abolish withholding tax on international bonds, interest and royalties payments between UK companies. The business assets taper relief has been extended to include part- and full-time employees of non-trading companies, back dated to April 2000. Further cuts to capital gains tax from April to 20% on business assets held for more than one year and to 10 per cent for business assets held for two years. An extension of the research and development tax credit for larger companies in order to further productivity gains.