Blink and you'll miss it

No one's finances will have been altered overnight by Gordon Brown's seventh Budget. It was mercifully devoid of fiscal flourishes. But it was notable for some of the issues the Chancellor remained silent on. He disappointed investors and savers by failing to acknowledge appeals to withdraw his plan to end the tax charge on dividends paid into Isas. He also ignored calls to reform inheritance tax so that it does not hit the homeowning classes.

The Chancellor chose to continue to target people on lower incomes. But Brown is probably aware that he is being rumbled. He has revolutionised the tax, benefit and pension systems, directing money to lower earners. And all achieved without raising income tax rates. People trying to bolster their finances by saving are being left largely to their own devices.

Many Observer readers will sympathise with the need to raise revenue to improve public services, even if it has been achieved by the back door. They are beginning to see the effect in their pay packets. Soon they will want to see value for money.

Small businesses

The Chancellor's 'new help for British business, industry and commerce' was held up as one of the Budget's main themes. He has gone for incremental improvements rather than dramatic giveaways. The Federation of Small Businesses and other groups appear underwhelmed.

Who: Small business owners and potential investors

What: More people will be encouraged to invest in small businesses under a US-style small business investment companies scheme and by extending venture capital trusts and enterprise investment schemes. Red tape is being reduced through VAT simplification measures. Tax benefits for small businesses include the widening of the scope of research and development tax credits and extending 100 per cent first-year tax relief on IT and communications spend until 31 March 2004.

Why: In theory, to encourage enterprise and entrepreneurship. But the Government probably wants to appease a business community increasingly disgruntled over the costs related to previous Budget measures.

When: The changes are staggered. Tax relief on IT spending and VAT changes have already come in, but consultation needs to take place this summer on the various investment vehicles before changes can be made.

How much: The small business investment companies scheme will be targeted at businesses wanting to raise between £250,000 and £1 million. The R&D tax credit threshold is being dropped from £25,000 to £10,000. The new VAT registration threshold has risen from £55,000 to £56,000.

Babies

Babies are set to become investors with the launch of the Child Trust Fund, a government-funded endowment designed to help children meet the costs of moving into adulthood.

Who: All babies born in UK since 1 September 2002.

What: A fund started with a contribution from the Government when a child is born, which can be built up with further contributions from parents, family members, friends and the children themselves. The child will have access to the money when he or she is 18, and can use it however he or she likes.

Why: The Government hopes the fund will increase financial education, promote positive attitudes to saving and ensure that all children, regardless of family background, will benefit.

When: The Government is still consulting on how the money should be invested. These products will be regulated by the Government, and the specifications for them and rules covering the way they are to be sold will be published this summer. The accounts may not become available until 2005. Information is expected this summer on the treatment of money owed to children born before they become available.

How much: An initial payment at birth of £250, rising to £500 for children from low income families who qualify for the full child tax credit (around one third of all children). In its consultation document, the Government mentions making further payments of about £50 during the child's primary and secondary education, possibly at five, 11 and 16. Additional contributions can be paid into the fund by family and friends up to an annual limit of £1,000.

Parents

Parents who were hoping for help from the Budget with expensive childcare costs were disappointed. A significant tax loophole that wealthier parents have used to employ nannies was closed.

Who: Families who employ their nanny through a limited company, paying fees to the company to enable the nanny to pay herself a small salary plus a larger amount of dividends, thus reducing the amount of income tax and national insurance they have to pay on her salary.

What: Nannies who are employed in this way must now pay themselves at least 95 per cent of the income of the company as a taxable salary.

Why: The Inland Revenue has already stamped out this practice with IT consultants, and it is now turning its attentions to nannies and butlers employed in this way. It is one of the tax abuses referred to by the Chancellor in his speech.

When: With immediate effect.

How much: For a nanny earning about £225 net a week, the parents will have to pay about £2,700 in extra tax and national insurance this year. Accountant Richard Murphy advises parents who have employed their nanny through this sort of company to dismantle it immediately and employ the nanny directly on a PAYE basis as this will save on the costs of running the company, particularly accountant's fees.

Pensioners

This group was singled out for special attention, but there was no new information on the pension credit, one of the Chancellor's pet projects, due to be introduced later this year.

Who: Pensioners aged 80 and over and those in hospital more than six weeks.

What: Winter fuel allowance rises from £200 to £300 for the over eighties. Hospital 'board and lodging' charges are now payable after 52 weeks rather than after six weeks.

Why: Government is wary of the political power of 11 million pensioners who were furious over the 75p pension increase of April 2001 and incandescent at hefty council tax rises this month. Neither of the new moves costs the Treasury much. Age Concern has campaigned on the hospital issue, which hit an estimated 30,000 older people a year.

When: The hospital change happened on Budget day and the winter fuel allowances will start this winter.

How much: Pension credit will give single pensioners up to £14.79 extra a week (£19.20 for couples) - for those with incomes under £139.10 (or £203.80 for couples).

The 'board and lodging' change means most people will not have to pay a weekly charge of £28.30. Most households are currently restricted to one winter fuel allowance even if two eligible people live there.

Tax

The Budget contained no surprises on tax but confirmed the Chancellor's intention of freezing personal allowances for all but people aged 65 and over. This means higher bills but there was some respite: the tax bands that determine the rates of tax paid on slices of income were increased in line with inflation.

Who: Freezing allowances affects the 27 million existing taxpayers and will mean that many people on low incomes will pay tax for the first time.

What: The basic personal allowance remains at £4,615.

Why: This is a device for raising revenue without raising tax rates.

When: The allowances for 2003-04 applied to income from last Sunday, the start of the new tax year.

How much: Amounts vary according to earnings and how much your pay goes up this year. Ernst & Young calculate that someone on a salary of £25,000 last year, whose pay rises in line with inflation at 2.5 per cent, will get £25,625 this year, increasing their tax bill this year by £132.70. Of this just under £26 is due to the fact the personal allowance has been frozen. A £50,000 earner last year whose salary goes up to £51,250 will see their bill rise by nearly £500, of which just under £50 is due to the freezing of the allowance.

Jobseekers

The unemployed, particularly single parents, are set to benefit.

Who: Jobseekers

What: Extra cash to cover job-seeking costs for anyone claiming jobseekers allowance. Additional cash for single parents who agree to start searching for work.

Why: These measures attempt to ease financial pressures on those looking for and returning to work to make it worth their while to come off benefit.

When: Grants will be available from job centres from April 2004. Extra payments for single parents will be paid from October 2004. Increases in the minimum wage take effect from October this year, while results of the review into extending the minimum wage to younger workers will be available from spring 2004.

How much: Job centre grants will be discretionary and made according to government guidelines, which won't be available until this summer.

Payments will be made from a nationwide fund of £20m. Extra payments to lone parents will be £20 a week, rising to £40 a week for the first full year of employment. The minimum wage rises to £4.50 for workers aged over 22, and to £3.80 for workers aged 18-21.

Homeowners

Those planning to buy for the first time were let down by the freezing of stamp duty at existing levels.

Who: Homeowners, particularly first-time buyers.

What: No increase in the stamp duty exemption threshold, though excessive duty on alternative lending arrangements will be abolished. The long-term fixed-rate mortgage market is to be reviewed.

Why: The Government believes developing more long-term, fixed-rate mortgages will help to make housing finance easier to plan and reduce volatility in the housing market. This in turn will help to ease the housing shortage.

Changing the way stamp duty is charged on Islamic mortgages will make the housing market more accessible to the Muslim community.

When: The stamp duty freeze takes effect immediately. Interim results from the mortgage review are due in the autumn, and recommendations will be made before next year's Budget. Changes to the stamp duty affecting Islamic mortgages start from 1 December.

How much: The only group to gain in concrete financial terms are Islamic homeowners.