Banner

Pre-Budget Report 2009: an outline summary

Tax

VAT is to revert to 17.5 per cent as of 31 December, but no other VAT measures are planned

Employer and employee national insurance contributions to rise by further 0.5 per cent as from April 2011, although the threshold for NI payments is to be increased so that nobody earning less than £20,000 will face extra charges

Employer pension contributions to be included in definition of tax income for pension tax relief purposes but will only affect those earning more than £130,000

As from April 2012, the point at which 40 per cent income tax becomes payable is to be frozen for a year

Increase in small company corporation tax to be deferred, leaving the rate at the 2010 level

One-off 50 per cent levy on bank bonuses over £25,000

Individual inheritance tax threshold held at £325,000 for the next year

New anti-avoidance measures to net £5 billion

New 50p a month levy on landline phones to pay for improved broadband network

Business support

Time to pay scheme, which allows firms to agree extra time for settling tax bills, to be extended for as long as necessary

Enterprise Finance Guarantee scheme also to be extended for a further 12 months, backing an additional £500 million of loans to businesses

A reduced corporation tax to be introduced on income generated by patents in the UK

Strategic Investment Fund given extra £200 million to support hi-tech projects

Empty commercial property relief threshold to be extended

Mortgages

Stamp duty holiday to end on 1 January

Scheme supporting mortgage interest payments for the unemployed to be extended for another six months

Pensions

Basic state pension to rise by 2.5 per cent next April, an increase of 4 per cent when the low rate of inflation is taken into account

Employment

From next month no-one under 24 needs to be unemployed for longer than six months, as opposed to the current 12 months, without receiving training or work

The minimum number of hours those aged 65 need to work in order to be eligible for tax credits is to be cut

Every 16 or 17 year old school leaver to be guaranteed a place in education or training again next September

Special fund to provide financial help for 10,000 undergraduates from poorer backgrounds, enabling them to join internships in industry and the professions

Environment

A further £200 million to go to supporting energy efficiency in 75,000 households

New scrappage scheme to be introduced to help 125,000 households replace inefficient boilers

Changes to be made to the climate change levy, company car tax and fuel benefit charge

Electric cars to be exempt from company car tax for five years

100 per cent first year capital allowance for electric vans

From April, those with home wind turbine or solar panels to receive an average payment of £900 tax-free if they send power back to the national grid

The economy

The economy will contract by 4.75 per cent this year, returning to growth by the fourth quarter

The Chancellor predicted that economy will grow by between 1 per cent and 1.5 per cent next year and by 3.5 per cent in 2011/12

Consumer inflation is set to rise to 3 per cent early next year before falling back to 1.5 per cent by the end of 2010

Government finances

Government borrowing is forecast to reach £178 billion this year and £176 billion in 2010 before falling further to £140 billion in 2011, to £96 billion in 2013 and to £82 billion in 2014

Expressed as a share of GDP, borrowing will stand at 12.6 per cent this year, 12 per cent in 2010, then 9.1 per cent, 7.1 per cent, 5.5 per cent in 2013/14 and 4.4 per cent in 2014/15

The Chancellor predicted that the budget deficit will be halved in four years

Government spending

Spending growth will slow to an average of 0.8 per cent a year between 2011 and 2015

Savings of £5 billion will be made on budgets and programmes such as major IT projects

Government contributions to public service pensions for teachers, councils, NHS and the civil service to be capped by 2012

All public sector pay deals to be capped at 1 per cent for two years as from 2011, though with special recognition for the armed forces