Last year’s Emergency Budget was about rescuing the nation’s finances and paying for Labour’s mistakes. Today’s Budget sticks to the plan, and focuses on reforming the economy to ensure jobs and growth for the future. I am also doing what I can help to families with the cost of living – including an immediate cut to fuel duty.

I know times aren’t easy for families at the moment, so this Budget announced help, including:

• An immediate cut in fuel duty by 1 pence per litre and a delay of April’s inflation rise in duty to next January. This means fuel duty is 6 pence lower than it would be under Labour. We are paying for this by putting up taxes on the oil companies while the oil price is high to create a Fair Fuel Stabiliser.
• An increase in the personal allowance from £6,500 to £8,100 over the next two years. This will mean £326 extra for working people and it will lift over a million low paid people out of tax altogether.
• £250 million to help 10,000 first time buyers get on the housing ladder.
• A freeze in Air Passenger Duty this year.
• Money for councils so virtually every council in England will freeze council tax next month.
• A new scheme to allow Gift Aid to be claimed on the contents of charities’ collecting tins and street buckets, and support for largest donations with radical reforms to Inheritance Tax – if you leave 10 per cent or more of your estate to charity, then the Government will take 10 per cent off your inheritance tax bill.

As well as helping in the short term we need to reform our economy to create growth and jobs in the future. The hard truth is that Britain has lost ground in the world economy.

Under Labour manufacturing halved, and growth depended on unsustainable public spending, debt and financial services. We need a new model of growth based on investment, manufacturing and exports – a Britain that makes things again. This Budget started that process, with measures that include:

• An additional 1p cut in corporation tax. In April this year corporation tax will fall from 28% to 26%. It will continue to fall by 1% in each of the following three years reaching 23%. Britain will be competitive again.
• Doubling Entrepreneurs Relief to £10m and sweeping changes to the generosity, simplicity and reach of the Enterprise Investment Scheme, with an increase in the income tax relief available from 20% to 30%.
• An extension of the small business rate relief holiday for another year.
• An additional £100m for new science facilities and more generous tax credits for small business research and development.
• 21 new Enterprise Zones with business rate cuts and new broadband to promote growth across the country.
• A review of the revenue raised by the temporary 50p rate of income tax.
• 50,000 additional apprenticeships and 100,000 work placements for young people.
• £3bn for a Green Investment Bank, which will generate an additional £15 billion in private sector investment in green projects and low carbon energy.

The Confederation of British Industry has already endorsed our approach saying: “This Budget will help businesses grow and create jobs.”

So this is our plan – reforming the economy to create jobs and supporting families. This Budget will put fuel back in the tank of Britain’s economy.

George Osborne
Chancellor of the Exchequer

The Chancellor tried to reassure us that he was being ‘fair’ and that ‘everyone will pay something but the people at the bottom of the income scale will pay proportionately less than those at the top’.

The key announcements included:

• VAT Rate rise – As anticipated the VAT rate will increase from 17.5% to 20% with effect from 4 January 2011.
• Personal Allowance increase – The personal income tax allowance is to increase by £1,000 in April 2011 to £7,475. This is worth £200 a year to a basic rate taxpayer.
• Capital Gains Tax increase – The Capital Gains Tax rate for higher rate taxpayers will increase from 18% to 28% from midnight tonight. It remains at 18% for basic rate tax payers.
• Entrepreneurs Relief extended – Entrepreneurs relief has been extended to a rate of 10% on the first £5m of gains as opposed to the first £2m.
• Corporation Tax Rate cut – The Corporation Tax rate will be cut by 1% each year over the next four years until it reaches 24%. The Small Companies rate is to be cut to 20%.
• National Insurance rise to stay – The National Insurance rate increases announced by labour remained intact and will still take place however the threshold at which employers start to pay will rise.
• No change to Cigarettes, Alcohol and Fuel – No changes were made to duty on cigarettes, alcohol or fuel and the plan to increase the duty on cider from July was scrapped.
• Freeze on Child Benefits – Child benefit is to be frozen for the next three years.
• Changes to Tax Credits – Tax credits will reduce for families earning over £40,000 next year but for low income families they will receive more Child Tax Credit with the amount per child increasing by £150 above the rate of inflation.
• State Pensions – The state pension is to be linked to earnings from April 2011 and is guaranteed to rise in line with earnings or 2.5% whichever is greater. The increase in the state pension age to 66 is to be accelerated.

For further details on the key announcements visit our website www.georgehay.co.uk where you can download a copy of our budget summary.

The Chancellor, Alistair Darling gave his final budget before there is a general election on Wednesday 24th March. He made very few announcements as the majority of tax rates and allowances had already been released in previous Budgets and the Pre Budget Report given in December. The key announcements were:

• Annual Investment Allowance increased to £100,000 for capital expenditure by businesses
• Entrepreneurs Relief doubled to £2 million
• Relief for first time buyers from Stamp Duty Land Tax on residential transactions up to £250,000
• VAT Registration threshold increased to £70,000

Our commentary on the budget is available on The George Hay Chartered Accountants’ website at www.georgehay.co.uk which gives further information on announcements made.

Over 70% of small businesses in the UK have developed creative solutions to strengthen their company during the recession, according to research commissioned by the Department for Business, Innovation and Skills.

The study shows that 77% of small companies have adapted their business to cope with the downturn with 26% adjusting working hours, 33% investing in additional staff training and rewards and 65% exploring new product areas.

Just under 50% of respondents that made changes to their business did so to take a pro-active approach to the challenging economic climate and 37% said it was so they were ready to capitalise on the economic upturn when it occurs.

“In the face of a global downturn small businesses have developed and applied practical changes to get the best out of their people and enhance their business,” said Lord Young, Minister for Employment Relations.

Stephen Timms, Treasury minister in charge of the Digital Britain plan, yesterday revealed he will introduce the law in the next Finance Bill.

Mr Timms said: “It is vital for jobs and growth that Britain has a world-class digital infrastructure.”

The £6-a-year levy on fixed phone lines – generating up to £175million annually – will subsidise next generation broadband networks in areas where they would not otherwise be viable.

But Jeremy Hunt, shadow culture secretary, said: “Slapping on a broadband tax is an old economy solution to a new economy problem.”

And Steve Weller, from uSwitch.com, said: “We are dismayed. If the Government truly intends to tax home phone users to fund the universal roll-out of broadband, this is a classic case of robbing Peter to pay Paul.”

Article from Daily Mirror – By Allison Martin 24/09/2009