Fiscal sovereignty, economic stability and adherence to international standards remain fundamental to the Treasury's consideration of any taxation initiatives.

The budget on 21 February 2006 announced the introduction from 1 April 2006 of the Zero tax rate to apply to all resident and non-resident non-regulated trading businesses in line with the approved Modified Taxation Strategy.

Income tax personal allowances increased by 2% to £9,200 for single persons and £13,400 for married couples; Personal income tax standard rate stayed at 10%, with the higher rate remaining at 18%; Tax cap on total income tax payable per person of £100,000 or £200,000 per married couple was introduced.