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Tax rates and allowances (Table A)
The following changes apply from 6 April 2000: basic rate cut from 23% to 22%; personal allowances and the thresholds for basic rate and higher rate increased slightly. The benefit of these two changes combined is in the region of £360 for a higher rate taxpayer. However, this is offset by the following changes, which were announced last year: married couple's allowance abolished (cost of £197 per couple); MIRAS abolished (cost of £240 on an 8% loan of £30,000 or more). The overall effect is complicated by the different rates which now apply to dividends, interest and other income, but the impact on a married couple with a mortgage and one significant earner is a tax increase overall of about £80 for the year. If both partners have significant income, there is a tax cut of some £285.

Future changes
The children's tax credit, which will be introduced in 2001/02 to replace the married couple's allowance, will be increased from the originally announced £416 to a maximum of £442 where neither partner is a higher rate taxpayer.  BACK