Emergency Budget 2010: Highlights

UK Economy

• The growth forecast for 2011 is revised down to 2.3% from 2.6%.
• The economy is predicted to grow by 1.2% in 2010, 2.3% in 2011, 2.8% in 2012, 2.9% in 2013 and 2.7% in both 2014 and 2015.
• Debt is to peak at 70% of the countries GDP in 2013/14.
• Unemployment is expected to peak at 8.1% this year and to fall in the coming years down to 6.1% by 2015.

Borrowing & Spending

• This year public sector net borrowing will be £149bn, which will eventually fall to £60bn in 2013/14.
• Current expenditure is set to rise – £637bn in 2010/11 to £711bn in 2015/16 mainly due to rising debt interest payments.

Banks

• A bank levy will be introduced from January 2011 and is expected to rise over £2bn a year.

Business

• The threshold from which employers start to pay national insurance will rise by the rate of inflation plus £21 per week from April 2011.
• Corporation tax will be cut next year to 27% and a further 1% annually until it reaches 24%.
• Tax rate for smaller companies will be cut to 20%.

Public Sector Pay

• People earning over £21,000 will expect a two-year pay freeze. However, those earning less will get a pay rise worth £250 in both years.
• Operational allowance will be doubled to £4,800 for armed services personnel in Afghanistan.

Tax

• VAT to increase to 20% from the 4th January 2011.
• In April, personal income tax allowance to be increased by £1000 which is worth £170 a year to basic rate taxpayers. 880,000 of the lowest paid will be expected to be taken out of the income tax altogether.
• Capital Gains Tax will rise from 18% to 28% from midnight for the higher rate taxpayers. The ‘entrepreneurs’ relief’ rate of 10% on the first £2m will be extended to the first £5m.
• 50p a month for landline tax will be scrapped.

Cigarettes, Alcohol and Fuel

• Labours duty on cider will be scrapped.

Pensions

• The basic state pension is set to rise in line with earnings, prices or 2.5% from April 2011 – whichever is greater.

Benefits

• Child benefit will be frozen for the next 3 years.
• Next year tax credits will be reduced for families earning over £40,000. Low-income families to get more Child Tax Credit – will rise by £150 per child above the rate of inflation next year.
• Housing benefit – A new maximum limit for different sized properties will be introduced – to save £1.8bn a year by the end of the Parliament.
• From April 2013, people who are unemployed will see their housing benefit cut by 10%, after 12 months of claiming Jobseekers allowance.
• The welfare shake-up will save £11bn by 2014/15.

For more information visit www.direct.gov.uk