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News - 25 November 2008

2008 Pre Budget Report

Our 2008 Pre Budget Report Analysis is a summary of Alistair Darling's announcements. Please review our summary and contact us with any areas of interest or concern. Below are the 2008 Pre Budget Report highlights:

VAT:

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

Personal Tax:

Increase in personal allowance of £600 to be made permanent. Personal allowance for next year to be £6,475. In the same vein, April 2010 will see a restriction in the personal allowance for those earning £100,000 or above. Those on £150,000 and over will receive no personal allowance at all.

National insurance to rise by 0.5 percent on all rates of national insurance as from 2011. National Insurance starting point to match income tax. Some welcome simplification here as the starting point for national insurance will now match that for income tax.

Top rate of income tax to increase to 45 percent on earnings above £150,000 as from 2011.

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

Business:

Rise in small company corporation tax from 21 percent to 22 percent to be deferred for one year from April 2009 to April 2010.

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.

Air passenger duty to involve higher charges for longer flights.

Introduction of a three year carry back for trading losses for a year, capped at £50,000. Currently trading losses incurred in a year can be carried back to the previous year (except in certain circumstances where the carry back period is longer). The Chancellor announced today that this three year carry back will apply to all losses subject to a maximum loss carry back of £50,000 to the earlier two years of the three year carry back period. There are no limits to carrying back the loss to the previuos year.

Mortgages:

Lenders will have 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 2009 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

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