On Wednesday 22nd April, Alistair Darling presented his 2009 Budget and admitted that the economy faces its worst year since the Second World War with UK borrowing set to be at a record £175bn. Not a particularly rosy future it would seem.
As usual the Chancellor announced various new tax rates and allowances many of which do not actually take effect for a couple of years but there were the usual ones which take effect straight away, such as 1p on a pint of beer and 7p on a packet of cigarettes. He also added 2p on fuel but not until 1st September 2009.
Some of the other announcements made as part of the speech, were aimed at the higher earners and included: the introduction of a 50% tax rate for those earning over £150,000 from April 2010. This measure was a change from that announced in the Pre Budget Report given only last November when then the top rate was going to be 45% and was not due to be brought in until 2011. A further measure to affect those with the highest income is that the tax relief on pensions is to be reduced for those earning more than £150,000 from April 2011.
In a move to help the car industry which has seen a reduction in sales of new cars the chancellor announced a car scrappage scheme from next month until March 2010 where motorists are to receive a £2,000 discount on new cars if they trade in a car which is older than 10 years. The industry is expected to foot half of this discount, with the government providing the other half. You do however have to have owned the old car for 12 months.
The Chancellor also tried to assist the housing market with extending the stamp duty holiday currently available on homes up to £175,000 until the end of the year.
To assist those with savings the tax- free ISA annual limit is to rise to £10,200 for the over 50 this year and for everyone else next year. Of that limit the cash ISA limit is to rise to £5,100.
What did the Chancellor do to help businesses? For those who are making losses, he extended the time limit for the carry-back of losses by a year to November 2010. He also doubled for one year the capital allowances rate to 40% but this will only assist those investing over £50,000 on capital expenditure.
So in all, there was nothing overly exciting in the Chancellor’s budget which will change our lives significantly, so pretty much we will all be carrying on exactly the same as we were yesterday and continue our dream to win the lottery one day.
To downloand a copy of our full budget summary click the below link