Alistair Darling has delivered the Pre Budget Report with his stated overriding aim to secure the recovery of the economy rather than wreck it.
Chief amongst the announcements was a further 0.5% rise in all employer, employee and self-employed rates of National Insurance from April 2011, although those earning less than £20K will be exempt.
Bankers also took a battering as a one-off 50% tax on bonuses over £25K was introduced in an attempt to persuade banks to rebuild their balance sheets instead.
It was also confirmed that VAT will return to 17.5% on 1 January 2010, while the inheritance tax threshold is to be held at £325K until 2011.
However, the Chancellor declined to grant an extension of the stamp duty holiday for properties up to £175K, much to the frustration of homebuyers. “The decision to end the stamp duty holiday is a disappointing one and this could dampen the positive signs in the housing market that we have seen over the past few months,” said Darren Cook, spokesperson for Moneyfacts Group. “First time buyers, the current lifeblood of the market, will be hard hit as not only will they need to raise a considerable deposit, but will also need to find the budget for an additional £1,250 plus tax bill.”
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Justin Moy