There’s been much debate and banter in the news in the run up to 22nd June about the Chancellor’s economic strategy regarding the emergency budget. Yesterday, laying facts to all the conjecture, George Osborne delivered his emergency budget.
· The controversial CGT hike, which was first proposed last month at an intended increase to 40-50 per cent to bring it line with income tax, has been set at 28 per cent following mass opposition by Conservative backbenchers. The increase became effective as of midnight last night. No change will effect the basic-rate taxpayer.
· As of January 4th 2011, VAT will rise to 20 per cent with the reduced rate rising by 1 per cent. The increase is estimated to cost the average household approximately £425 more per year.
· The tax threshold will rise to £7,475 from £1,000, making the basic-rate taxpayer £170 a year better off.
· One piece of good news for the landlord; council tax is frozen for a year, which gives a little consolation for landlords with empty properties.
· Banks and Building Societies will now be taxed on the size of their balance sheets. The size of the savings they have, the less tax they will pay.
· Corporation tax is set to drop by 1 per cent for the following 4 years.
· Housing Benefit will be limited. A maximum of £280 per week will be granted for one-bedroomed accommodation and £400 per week for a 4+ bedroomed property.
· Employers national insurance contributions will change to lower the cost of employing people who earn less than £20,000.
· Child Benefit will be frozen for 3 years.
As expected, cuts will be made throughout the public sector. For those earning less than £21,000 per year, a £250 pay rise is expected annually. For those above this threshold, pay will be frozen for 2 years. All Government departments can expect a 25 per cent reduction in spending over the next 4 years. These cuts are not applicable to the NHS o International Aid