Tax: 'a 10p starting rate

We said in our manifesto that we would introduce a 10p starting rate of income tax for individuals when it was prudent to do so. I repeated in the last Budget that we would introduce the 10p starting rate when it was prudent to do so.

However, I have to tell the House that this 10p rate will not start in April 2000, like other income tax changes we are making today. It is prudent, instead, for people to get the benefit of the 10p starting rate now.

So it will take effect in April 1999, a 10p starting rate on the first ?1,500 of income, the lowest starting rate of tax since 1962, and it will be delivered a few weeks from today.

People will see it in their pay packets in May. Nearly two million people will see their income tax bills cut in half, and take home 90 pence of every pound they earn.

The new income tax structure will this year be 10p, 23p and 40p.

And income tax allowances, income limits and tax thresholds will rise as usual in line with inflation.

The tax rates on savings will remain unchanged. So this is a Budget with a 10p starting rate of income tax. A 10p starting rate of small business tax, a 10p long term rate for capital gains tax.

The maximum small business tax is now down to 20p and corporate tax for big companies down to 30p. The tax cuts I have made today are tax cuts for a purpose, tax cuts that encourage work and make work pay, that help all middle and lower income families, tax cuts for the many and not just the few and at the best time for the economy.

I can confirm that the share of tax in national income will fall next year. And the tax burden on the typical family with children will fall below 20% for the first time in 20 years.