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News - 22 April 2009

Budget 2009 - Key Points

ECONOMY

The economy to shrink 3.5% in 2009, but grow by 1.25% in 2010 and by 3.5% annually from 2011.

Growth expected to pick up in 2010, expanding by 1.25%.

Borrowing to rise to £175bn in 2009, followed by further rises of £173bn, £140bn £118bn and £97bn the following years.

CPI inflation to drop to 1% by the end of the year.

PERSONAL TAXATION

A new income tax rate of 50 per cent will apply to people earning over £150,000 per annum.

The income tax personal allowance will be reduced to those with incomes over £100,000 per annum.

Basic Rate of income tax to remain unchanged at 20%.

Statutory redundancy pay is increased from £350 to £380 per week.

ALCOHOL, TOBACCO AND FUEL

Alcohol taxes go up 2% at midnight - or 1p a pint.

Tax on tobacco up by 2% from 6pm - or 7p on a pack of 20 cigarettes.

Fuel duty to rise by 2p per litre from September, followed by 1p a litre over inflation each April for four years.

BUSINESSES

The enhanced loss relief scheme announced in the 2008 Pre-Budget Report which allows lossmaking businesses to reclaim taxes for the last three years will be extended for an additional
year.

Capital allowance rate doubled to 40% from 20% from April 2009 to April 2010 on new investements that exceed the Annual Investment Allowance limit of £50,000.00 per annum.

Increasing the VAT registration threshold in line with inflation.

Expanding the Business Payment Support Service, so businesses facing temporary financial difficulties can spread tax payments over a timetable they can afford.

 £750m strategic investment fund to help emerging technologies and regionally important sectors.

A new £750 million strategic investment fund will be introduced to support industrial projects considered strategically important. A third of this funding will be directed to low-carbon projects.

A ‘top-up’ trade credit insurance scheme under which the government will offer to ‘top-up’ private sector trade credit insurance provision for six months where insurers have reduced cover.

A consultation by the Insolvency Service on changes around Company Voluntary Arrangements, to help firms in difficulty to access funding and give small companies extended breathing space from creditors.

PENSIONS AND SAVINGS

Basic state pension will increase by at least 2.5%.

A rise of £100 to over-80s households and £50 to over-60s households in 2009/10, via the Winter Fuel Payment.

Tax relief on pension contributions will be restricted to those earning £150,000 and over per annum.

The annual investment limit for ISAs rises to £10,200 of which £5,100 can be saved in cash. These higher limits will be available to over-50s from 6 October 2009 and to everyone from 6 April 2010.

The Pension Credit Allowance will be raised from £6,000 to £10,000 from the end of this year.

HOUSING AND HOMEOWNERS

The Stamp Duty land tax threshold on residential properties costing £175,000 or less will be extended until 31 December 2009.

Another £80m for the shared equity mortgage scheme.

£400 million to re-start building projects stalled because of credit constraints. £100 million for local authorities to build energy efficient social housing. £50 million for renovating armed forces housing.

MOTORING AND TRANSPORT

A temporary car scrappage scheme - it offers consumers £2,000 off the cost of a new vehicle to replace a vehicle more than 10 years old.

EMPLOYMENT AND TRAINING

18-24 year olds who have been unemployed for 12 months will be guaranteed a job, training or a work placement.

An extra 54,500 places will be created in the next academic year for 16 and 17 year olds who wish to take them up.

TAX CREDITS

The child element of Child Tax Credit will be raised by £20.00 from April next year.

An extra £100 a year will be added to disabled children's child trust fund, with the provision that £200 a year will be awarded to children with severe disabilities.

Grandparents who act as carers for their grandchildren for twenty hours or more a week will have such work counted toward their entitlement for the basic state pension.

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