2010 June Emergency Budget Summary
The much talked about Emergency Budget was delivered by the new Chancellor, George Osborne, on 22nd June and as expected a hard line has been taken in respect of the Public Sector, although some measures will help businesses which are key to the economic growth of the country.
The key points are as follows:
• Public Sector pay is to be frozen for 2 years for those earning over £21,000. Those earning less than this will receive a £250 rise for each of the 2 years.
• It is likely that the proposed increase in the retirement age to 66 will now be accelerated.
• Significant reforms will be made to the Tax Credit system i.e. reduce payments made to families earning over £40,000 per year but at the same time increase the payment to low income families by £150 per year.
• There is to be no increase in duty levied on alcohol, tobacco and fuel and the proposed rise on cider prices is to be abolished.
• From Midnight on 22nd June 2010 Capital Gains tax increases to 28% from 18% for higher rate tax payers.
• Personal allowances will increase by £1,000 from April 2011 for basic rate taxpayers.
• Housing benefit is to be capped.
• Child Benefit is to be frozen for 3 years.
• Council Tax may be frozen for 1 year.
• Corporation Tax is to be reduced for small business by 1% to 20% from next April.
• Corporation Tax for large businesses will reduce by 1% over the next 4 years down to 24%.
• Vat is to be increased to 20% from 4th January. We will issue further guidance on this and how it is reflected in the Flat Rate Scheme once we have this information.
• From January 2011 UK banks, building societies and UK operations of foreign banks will be subject to a ‘bank’ levy. This will not be applied to small banking institutions.
• The 50p ‘landline’ tax Labour intended to impose to fund better broadband connections has been scrapped.
Full details of the Budget are available here