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Emergency Budget 2010 - UK

Published: Tuesday, 22 June 2010

Source: www.direct.gov.uk

Tax changes

VAT - the standard rate of VAT (Value Added Tax) will rise to 20 per cent from 4 January 2011 - the current rate is 17.5 per cent
Personal Allowance – the Personal Allowance for people aged under 65 will increase by £1,000 in April 2011 - this means the point at which you start paying tax will rise from £6,475 to £7,475 for the 2011-12 tax year
Capital Gains Tax - CGT will increase from 18 per cent to 28 per cent for higher rate taxpayers
Benefits and tax credits
Child tax credit - the child element of child tax credit will increase by £150 above indexation in April 2011 and £60 above indexation in April 2012
Child tax credit - families earning more than £40,000/yr won’t get child tax credit from April 2011
Child Benefit - rates will stay the same for three years
Welfare reform - Housing Benefit and Disability Living Allowance will be reformed to focus on those most in need
Benefits and tax credits will be worked out using the Consumer Prices Index instead of the Retail Prices Index from April 2011

Pensions

State Pension - from April 2011, there will be a ‘triple guarantee’ so the basic State Pension will rise by whichever is highest of; the average increase in UK wages, how much the cost of living increases that year, or 2.5 per cent
Public sector pensions - a commission has been set up to investigate the cost of public sector pensions - early findings will contribute to the Spending Review on 20 October 2010, with a full report in time for next year’s Budget

Savings and investments

Capital Gains Tax - CGT will increase from 18 per cent to 28 per cent for higher rate taxpayers

Alcohol and tobacco

Housing

Housing Benefit - welfare reforms will focus Housing Benefit more on those in need
Housing Benefit - benefits are to be up-rated in line with the Consumer Prices Index instead of the Retail Prices Index from April 2011
Capital Gains Tax - higher rate taxpayers face an increase in Capital Gains Tax from 18 to 28 per cent
Council Tax – the government will work with local authorities to freeze Council Tax in 2011-2012

The public sector and public spending

Spending - public spending will be reduced by £30 billion a year by 2014-15, in addition to existing plans
Pay – there will be a a two-year public sector pay freeze, while protecting those public servants earning less than £21,000 a year
Council Tax – the government will work with local authorities to freeze Council Tax in 2011-12

Employment

Public sector – a two year public sector pay freeze, while protecting the 1.7 million public servants who earn less than £21,000
National Insurance – the threshold at which employers pay National Insurance will be raised by £21 per week in April 2011
National Insurance - new businesses outside the Greater South East will be exempt from up to £5,000 of employer National Insurance Contribution payments for the first ten employees hired

The economy

Bank bonuses - action will be taken on unacceptable bank bonuses, with a levy based on banks’ balance sheets from 1 January 2011 to reduce profits from excessive risk-taking
Capital Gains Tax – CGT will rise from 18 to 28 per cent for higher rate taxpayers
Capital Gains Tax - the 10 per cent CGT rate for entrepreneurs will rise from £2 million to £5 million
Corporation Tax - the small profits rate of Corporation Tax will be reduced to 20 per cent from April 2011
National Insurance - the threshold at which employers start to pay National Insurance will be raised by £21 per week above indexation in April 2011
National Insurance - new businesses outside the Greater South East will be exempt from up to £5,000 of employer National Insurance Contribution payments for first ten employees hired
Enterprise Finance Guarantee - EFG increased by £200 million to support £700 million of additional lending until 31 March 2011 - the EFG supports lending to small businesses that find it difficult to get normal commercial loans

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