CHANCELLOR Gordon Brown has cut basic rate income tax by 2p to 20p in his 11th and probably final Budget.

"It is the lowest basic rate of income tax for 75 years," he told the Commons today.

But Mr Brown is abolishing the 10p rate of income tax.

By April 2009 the 40 per cent higher rate threshold will be raised to £43,000.

Gas-guzzling cars will be penalised with highest band road tax of £300 next year then £400 the year after, as widely trailed.

For the most fuel-efficient cars, road tax will be cut from £50 to £35.

Other Budget changes included:

  • Fuel duty - up 2p per litre (deferred to October);
  • Beer and cider - up 1p per pint;
  • Wine - up 5p per bottle;
  • Sparkling wine - up 7p per bottle;
  • Spirits - duty frozen;
  • Cigarettes - pack of 20, up 11p from 6pm.