Pre Budget Report 2009 - a review of key points for Hinckley businesses and individuals
10th December 2009
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The stand out item in the Chancellors eagerly awaited pre-budget report must be the increase in National insurance by a further 0.5% for those earning more than £20,000 from 2011 onwards. The other main points that may have an impact upon small businesses and individuals are:

  • Time to pay arrangements for businesses extended for "as long as necessary". As many as 160,000 companies have taken up this scheme;
  • Business rates - exemptions to be extended into 2010 and 2011 for properties at a rateable value below £18,000;
  • Corporation tax - next year’s planned rise for small businesses from 21% to 22% has been shelved;
  • Working tax credits - over 65s will have to work fewer hours to qualify and unemployed over-50s to be given new training;
  • VAT - standard rate is returning to 17.5% on 1 January 2010 as planned;
  • GDP - growth next year is projected at between 1 to 1.5%, 3.5% in 2011 and 3.5% in 2012. The third quarter of 2009 saw GDP shrink 0.3%. It is expected that during 2009 the economy will have reduced by 4.7%;
  • Inflation - expected to fall back to 1.5% by the end of 2010;
  • Banks:
    • potential losses from the government's intervention into banks will fall to £10bn, from an anticipated £50bn;
    • a one-off levy on banking bonuses worth more than £25,000 to put £500m back into the UK's coffers;
  • Budget deficit - projected at £178bn this year, a little larger than first thought. Next year the deficit should fall by £2bn to £176bn. It is expected that the budget deficit will then fall to £140bn in 2011 with further reductions in 2012 to £117bn and 2013 to £96bn;
  • Capital growth fund - a £500m fund will be set up to aid businesses struggling to get access to credit;
  • UK's net debt - is projected, as a percentage of GDP at 56% but this figure is likely to rise next year to 65% before rising again to 78% by 2014/2015;
  • Clean energy and low carbon technology:
    • investment planned for up to £160m and this will include £90m for green infrastructure projects;
    • electric cars will be exempt from company car tax for the next five years and tax allowances will be introduced for electric vans.
  • Telecommunications - households will be charged an extra 50p per month on their landlines to help the government fund the expansion of faster broadband across the country;
  • Education - up to 10,000 students from low income backgrounds will receive financial support and helped into internships and businesses
  • Pension tax relief - to be cut for people earning more than £150,000;
  • Inheritance tax - the individual threshold will be frozen at £325,000, married couples at £650,000;
  • Tax avoidance - another clamp down will be looking at 100,00 offshore accounts to protect £5bn a year of tax revenues;
  • National Insurance - contributions will rise by 0.5% (over and above the 0.5% already announced) for all employer, employee and self-employed in 2011 but those paid less than £20,000 will be spared.
  • Prisons and legal aid - £5bn in public spending savings through outsourcing of prisons and reforming legal aid;
  • Public Spending - no public spending review before the next general election;
  • Military Spending - a planned £2.5bn to support military operations along with £5m set aside to help returned soldiers set up businesses.

Trust that the above notes will help you to gain a quick overview of the key points but of course, if you would like further details or more detailed explanations of issues of concern to you then do get in touch with me – Andrew Hurd at Ask! Accountancy 01455 240 619.

Further in-depth coverage can also be found on the BBC News website: Pre-budget report 2009.

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