Chancellor of the Exchequer Alistair Darling delivered what could be his last ever Pre-Budget Report to the House of Commons at 12.30pm today.
Here are some of the highlights:
-Alistair Darling sets the scene, describing a critical time for our economy and our country. He describes the task to ensure recovery, promote long-term growth. Wants a fairer society and opportunity for all.
-VAT will return to 17.5% on 1st January 2010 as planned. No other changes to VAT.
-‘Time to pay’ scheme for companies deferring tax has been extended for as long as it is needed.
-Empty property relief extended for 2010/11 for rateable value below £80,000 exempt for business rates.
-Defers 1p increase in corporation tax for smaller companies, 2010/11 rate remains unchanged.
-Not right to withdraw all support for homeowners as unemployed rises. Extending mortgage support to those who lose their jobs for a further six months. Stamp duty holiday is ended as planned.
-Under 24’s guaranteed work or training after six months of unemployment. Specialist support for over 50’s to get back into work.
-Reducing minimum number of hours to be eligible for working tax credit for those over 65.
-Basic State pension will rise by 2.5% from April 2010. Not a new measure – already guaranteed minimum increase under legislation!
-Guarantee that people in work will always be better off than they would be on benefits.
-Darling predict short term increase in inflation due to VAT rise before it falls back.
-Estimated cost to taxpayer of bank bailouts cut from £50bn to £10bn.
-Net debt as share of GDP predicted to rise to 78% by 2014.
-Trying to secure £500m from the banks to create capital growth fund for SMEs.
-Announces boiler scrappage scheme, as leaked to the BBC this morning. Other ‘green’ measures also announced.
-Electric cars exempt from company car tax for five years. 100% first year capital allowance on electric vans.
-Decided against a windfall tax on banks. Introduces from today a one-off levy on any discretionary bonus over £25,000 of 50%, paid by the bank not the employee. Expected to yield over £500m.
-Pension tax relief – includes employer pension contributions in definition of income for anti-forestalling measures, introduces floor so nobody earning less than £130,000 will get caught up in this.
-Freezes inheritance tax nil-rate band at £325,000 for 2010/11.
-Freezes 40% income tax band for next tax year, will bring more people into higher rate of income tax as a result of earnings inflation.
-Changes to pension tax relief anti-forestalling measures will now include employer pension contributions in definition of relevant income, catching up people earning £130,000 or more.
-Phasing-in of introduction of pension Personal Accounts.
-State contributions to public sector pensions will be capped by 2012, saving £1bn a year, those earning over £100,000 will have to contribute more to maintain their pension benefits.
-Public sector pay increases capped at 1% for two years from 2011.
-National Insurance contributions up by 0.5% from April 2011 across the board, those earning less than £20,000 protected from this tax rise.
-Extending free school meals to a further 500,000 primary school children.
You can find links to the Pre-Budget Report at prebudget.treasury.gov.uk.
