Tax rates and allowances (Table A)

Personal allowances and higher rate thresholds were increased in line with inflation. The rates of tax for individuals are unchanged. The benefit is in the region of £220 for a higher-rate taxpayer. This benefit is much smaller for a person on a low income, but is likely to represent a larger share of that person's tax bill.

The overall effect is complicated by the different rates which continue to apply for general income, interest and dividends, and the possibility that a separate claim may be made for tax credits to be repaid by the Revenue. The calculation of the tax position remains as complex as ever.

Income split between husband and wife

Over the last year, the Inland Revenue have been giving publicity to their views on some arrangements which save tax by splitting businesses between husband and wife. The Revenue believe that they often have the right to give the income back to the higher-rate taxpayer who runs the business, cancelling the tax saving. Many tax advisers think that the Revenue usually do not have that right.

The Budget does not contain any new measures about the basic argument, but one method of avoiding it has been closed down: it was possible to split income 50:50 for tax purposes by putting the shares in the joint names of husband and wife, even if the actual split was different. This will no longer apply to income received from a closely-controlled company on or after 6 April 2004: the income will be split between husband and wife according to their actual ownership of the underlying asset.