Pre-Budget Report 2008: an outline summary

24 November 2008

Tax

VAT is to be cut as from 1 December to 15 per cent until the end of 2009, but duties on petrol, alcohol and tobacco to rise to offset the reduction

Increase in the income tax personal allowance of £120 a year for basic rate taxpayers to be made permanent and to be raised to £145 in April

National Insurance to rise by 0.5 per cent on all rates of national insurance as from 2011

Top rate of income tax to increase to 45 per cent on earnings of £150,000 as from 2011

Air passenger duty to involve higher charges for longer flights

New car tax fuel efficiency bands still to be introduced but at a more gradual pace, with a top increase next year of £5

Consultation on the wording of a taxpayers’ charter to begin in January

†

Business

Rise in small business corporation tax from 21 per cent to 22 per cent to be dropped

Businesses to be allowed to spread tax payments over longer periods of time

No legislation to be introduced on income shifting in the 2009 Finance Bill, but the issue is to be kept under review

£1 billion to be set aside to help small business borrowing by means of a temporary small-business lending scheme

£1 billion to help exporters through the export credit guarantee department

Rise in the threshold on duty payable on empty business premises

Watchdog to monitor bank business lending

†

Mortgages

Lenders to wait three months in the case of defaulted payments before pursuing repossession

Ceiling at which homeowners who lose their jobs can apply for help with mortgage payments to rise to mortgages worth £200,000

†

Families

Increase in child benefit to come into effect in January instead of April 2009

Pensioners to get above-inflation increases, up from £124 to £130 a week for couples and up from £89 to £98 a week for individuals

†

Government spending

£3 billion of capital expenditure scheduled for 2010/11 to be brought forward to this year; funds are to be spent on roads, schools, social housing and new energy measures

†

Government borrowing

Public borrowing set to climb to £78 billion this year and £118 billion next year, and to fall back to £54 billion by 2014

Debt as a proportion of GDP to reach 57 per cent by 2013/14

Policy of borrowing only to invest over the economic cycle will not be re-introduced until 2015/16

†

Growth

Forecast for 2009 puts UK economic growth at between -0.75 per cent and -1.25 per cent

Forecast for 2010 puts UK economic growth at between 1.5 per cent and 2 per cent