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The Emergency Budget – 22 June 2010

The Chancellor, George Osborne, has sought  to balance the books by 2015 in his first budget characterised by higher taxes, swingeing spending cuts and deep savings in welfare. Here are the main points.

Tax

• VAT rises by 2.5 per cent to 20% from 4 January 2011
• Capital Gains Tax to increase to 28% from midnight tonight for higher rate tax payers
• Capital Gains Tax for basic rate tax payers remains at 18% 
• Capital Gains Tax entrepreneurs’ relief rate of 10% on the first £2m of gains will be extended to the first £5m.
• Personal income tax allowance increases in April 2011 by £1000 to £7475
• National insurance threshold rises by £21 next year Alcohol, tobacco & fuel No change but planned increase in cider duty scrapped

Benefits

• Child benefit frozen for next 3 years
• Tax credits reduced for families earning over £40,000 but for low income families child tax credit increased by £150 above rate of inflation next year
• Housing benefit limited to £400 per week
• Medical assessment from 2013 for claimants of Disability Living Allowance
• State pension to be linked to earnings from April next year
• Increase in state pension age to 66 to be accelerated

Business

• Corporation tax cut to 27% next year and by 1% annually for next three years bringing it down to 24 per cent by 2014.
• Small companies tax rate cut by one per cent to 20%
• Bank levy from 2011

Public Sector

• 2 year pay freeze for public sector workers earning over £21,000
• Those earning less than £21,000 to be paid £250 extra each year for next two years

To discuss any of the issues raised by the Budget with one of Pearson Hinchliffe LLP's specialist tax solicitors or independent financial advisers, please use the details below.