In his second budget Chancellor Alistair Darling was forced to set out the full extent of Britain's economic problems and what he proposes to do to stimulate the economy and rebalance the budget deficit.
I am sure none of us envied the job he had to do but all have our own opinions as to what should be done to get the public finances back on track. In the midst of a recession, rising unemployment and the cost of the bank bailouts, etc there was very little for the Chancellor to play with and in my opinion this clearly showed in the announcements made.
We will now consider the detailed press releases and consultation documents to see what, as ever, the devil in the detail contains but in case you have not yet been able to catch the main announcements coming out of the budget report we thought we would summarise them for you.
Economic Announcements
· The chancellor made the following prediction of when the recession will end - The action already taken in the UK, and internationally, means he expects the economy to start growing again towards the end of this year . This far sooner than most economic commentators predict.
· He expects GDP for the economy as a whole is predicted to fall by 3.5% in 2009 and grow by 1.25% in 2010 and grow by 3.5% in 2011.
· The Bank of England inflation target to remain at 2%.
· The Chancellor expects net borrowing of £175bn in the current year amounting to 12% of GDP.
· Budget is not predicted to go back until surplus until 2017.
Taxation Announcements
· VAT cut from 17.5% to 15% will continue until December 2009.
· Income tax will increase for individuals earning over £150,000 from 40% to 50% from April 2010. This is a further increase from the expected rise to 45% announced in the pre budget report and will start a year earlier.
· From April 2011 pension tax relief will be restricted for people earning over £150,000.
· Benefit of personal income tax allowance to be removed for those earning more than £100,000 from April 2010.
· Stamp duty holiday on properties worth £175,000 or less will be extended until the end of the year.
· Various loopholes in legislation will be closed to close many tax avoidance schemes.
· The small companies rate of corporation tax to remain unchanged at 21% and the main rate unchanged at 28%.
· Companies to be able to carry back losses of up to £50,000 for three years with the normal unlimited loss carry back for the first year.
· A first year capital allowance of 40% to be introduced from April 2009 for one year.
· The fuel duty will rise by 2p per litre from September.
· There is to be an increase of 2% in duties on alcohol and tobacco from this evening.
· Statutory redundancy pay will increase from £350 to £380 a week.
· Children's tax credit will increase by £20 by 2010.
· ISA limits will be increased to £10,200 with a limit of £5,100 to be saved in cash from October 2009 for those aged over 50 and from April 2010 for everyone else.
· From April 2011 the £80,000 cap on car list prices for calculating company car benefits in kind to be abolished.
· Increases in company car tax will apply from April 2011.
· VAT registration limit to be increased to £68,000 from 1 May 2009.
· Significant changes to the VAT place of supply rules to those that supply or receive services to or from overseas individuals and businesses from January 2010.
Other Announcements and Measures to be Introduced
· A vehicle scrappage scheme will be introduced from next month until to March 2010. Motorists will be given £2,000 to scrap their old cars (those more than 10 years old) in exchange for a new vehicle.
· As expected Darling announces that from January, all people aged 25 years or under will be given a job or training.
· All long-term unemployed individuals under 25 to be offered either a job or training.
For more information about the Inspire analysis of the Budget please feel free to contact us on 0800 077 6410. | 
