Pre Budget Announcement 2009

Here are the key points:

Tax

- VAT will return to 17.5pc on January 1 as planned, with no other changes in VAT.
- Bingo Duty to be cut from 22pc to 20pc for next year's Budget.
- In April 2012, point at which people start paying 40pc income tax to be frozen for one year, hitting those earning more than £43,000.

National Insurance Contributions

- All employer, employee and self-employed rates of National Insurance to rise by a further 0.5pc from April 2011.
- Starting point from which National Insurance is payable to be raised so that no-one earning less than £20,000 will pay any more in contributions.

Pensions

- Basic state pension will rise by 2.5pc in April, a real-terms increase of nearly 4pc.
- Employer pension contributions to be included in definition of tax income relating to pensions tax relief for those earning over £130,000.

Inheritance tax

- Individual Inheritance Tax allowance to be frozen at £325,000 for the next year.

Banks

- No windfall tax on banks
- Bonuses above £25,000 will subject to a 50pc one-off tax, payable by the bank not the employee. This is expected to yield £550m, which will pay for measures to help the young and older unemployed back into work.

Business

- Enterprise Finance Guarantee scheme for bank loans to small businesses to be extended for a further 12 months, guaranteeing a further £500m of loans.
- 10pc Corporation Tax rate to be introduced on income which arises from patents in the UK.
- Strategic Investment Fund to support hi-tech projects given £200m boost.
- The Time To Pay scheme allowing firms to spread tax payments will be extended for as long as needed.
- Empty property relief threshold to be extended so that 70pc of all empty properties will be exempt.
- Increase in Corporation Tax for smaller companies to be deferred, leaving the 2010 tax rate unchanged.

Growth

- GDP to contract by 4.75% this year, against the previous 3.5% forecast

- Growth to resume next year to 1 - 1.5%, and an almost unprecedented 3.5% in the following two years.

Borrowing

 - Annual borrowing to peak at £178bn this year, falling to £176bn next year, and halve over the following 4 years to £82bn by 2014-15
- This represents a fall from over 12% of GDP to under 4.5%, still way above the targets which still theoretically apply for membership of the euro.
- The tax rises so far announced account for only a small part of such a fall. If the rest is met by public spending restraint the cuts will have to be savage. No such sustained reduction has been achieved since the war.
- According to these projections the national debt will rise to nearly 80% of GDP by 2014 against previous projections of 100%.
- All these projections are crucially dependent on the sustained 3.5% growth forecasts which most outside economists regard as extremely optimistic.

Jobs/unemployment

- Support for mortgage interest payments for the unemployed to be extended by six months.
- Financial support for 10,000 under-graduates from poor backgrounds to take up internships in industry and the professions.
- Expects unemployment in the UK will keep rising for some time.
- Guarantees of a place for every 16 and 17 year-old in education or training to be available to school-leavers again in September 2010.
- From next month, no-one under 24 needs to be unemployed for longer than six months - down from the current 12 months - before being guaranteed work or training.
- Minimum number of hours those over 65 need to work to receive Working Tax Credit to be reduced.
- Government to guarantee that anyone in work will always be better off than they were on benefits, with extra cash help from the Government if needed.

Benefits

- Benefits linked to inflation, such as Child Benefit, will rise by 1.5pc in April.
- Support for Mortgage Interest Scheme will be extended for further 6 months.

Green

- Government to finance four carbon capture and storage demonstration projects.
- An extra £200m to be released from April to help with energy efficiency, with an extra 75,000 households helped by the Warm Front scheme.
- New scrappage scheme to help up to 125,000 homes replace inefficient boilers, and changes to be made to the Climate Change Levy, company car tax and fuel benefit charge.
- From April, people with a home wind turbine or solar panels who send power back to the National Grid to receive an average tax-free payment of £900 a year.

Transport

- Electric cars to be exempted from company car tax for five years, with a 100pc first year capital allowance for electric vans.

Telecoms/Digital

- Super-fast broadband to be extended to 90pc of population by the end of 2017, funded by 50p-a-month duty on landlines.
 
Daily Telegraph
HM Treasury
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