Pre-Budget Report 9 December 2009 - An overview
The outline of the strategy to combat the public sector deficit is clear. The real money will come from an increase in National Insurance of 0.5% in addition to the 0.5% rise already announced. These will only come in after the election in APril 2011.
There is a political gesture by announcing a 50% tax on banks for bonuses in excess of £25,000. payable by the banks - in addition to the tax and NIC which will be due from the employee. It will only affect a few firms.
Many people of a sceptical nature have noticed that there is very little detail of what cuts in services will have to be agreed to meet the pledges on public spending. No doubt the opposition will be equally vague. Both sides appear to agree that precision on these matters is unlikely to result in additional votes in the election.
The good news for many of our clients is that there is no increase in the capital gains tax rates - which had been predicted by many observers - nor any anti-avoidance rules for companies which are members of partnerships.
There is more information on some more technical issues here |
Major Issues & themes |
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Economy - due to shrink by 4.75% in 2009 - worse than 3.5% forecast.
Growth of 1-1.5% for 2010 and 3.5% 2011.
PSBR - £178bn in 2009 and £176bn in 2010
Public Spending - set to fall by 0.8%
Public sector pay - frozen at 1% for two years from 2011.
Cost of bank rescue - estimate of cost now reduced from £50bn to £10bn. |
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| Business |
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Exemption from company tax regime for all electric cars.
50p tax per month on landline phones to fund high speed broadband.
Corporation tax increase of 1% is deferred
10% special tax rate on income from patents - to try to boost science.
More information on R&D tax credits and EMI
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| Other taxes |
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Bank Payroll Tax. Any bonuses for services to a bank from today until 5 April 2010 will be subject to a tax on the bank of 50%
VAT will return to 17.5% as planned
Bingo duty reduced. Even though not many people were aware there was any tax!
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| Individuals |
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Increase in NI rates by 0.5% April 2011.
Higher rate bands - no increase for inflation which will increase the overall tax take.
More Information on Pension forestalling
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