1997 Budget - At A Glance

Personal - how the budget affects the individual
Corporate - The windfall tax and more
Social - hospitals and schools get a boost
Forecasts - what lies in store

• Taxation
  
  • Corporation tax cut by 2 points to 31%
  • Tax on small and medium sized businesses cut by 2 points to 21% - both measures backdated to April 1997
  • Capital allowance on plant and machinery doubled for one year for small and medium sized businesses
• Dividends
  Tax credits paid to pension funds and companies abolished - but paid to Pep holders, non-taxpayers and charities until April 1999.
  End to foreign income dividends scheme from April 1999
• Windfall Tax
  £5.2 billion to be raised - mainly to fund the welfare to work programme, with some to be spent on schools.
  £2.1 billion from electricity, £1.65 billion from water and £1.45 billion from others (Railtrack etc)
  Tax to be paid in two instalments

  Social

• NHS
  £1.2 billion allocated from reserves for 1998-9
  Health spending expected to rise 2.25% in real terms during 1998

• Schools
  £1 billion for schools from reserves
  Money from windfall tax for infrastructure and equipment
  £1.3 billion to be allocated over five years.

  Forecasts

  Five-year public defecit reduction plan - underlying PSBR set at £13.25 billion in 1997-98, £5.5 billion in 1998-9.
  GDP to rise 3.25% this year and 2.5% next year.
  Consumer spending to rise 4.5% this year, 4% in 1998.
  Inflation 2.5% in 1997, 2.75% in 1998, 2.5% in 1999.
  Economic growth 2.25% this year.