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Budget June 2010 - how the Budget affects you

  • Published: Tuesday, 22 June 2010

Chancellor George Osborne has delivered his Budget speech, outlining how the government plans to raise and spend money during the coming year. Read on for details of what was announced in the June 2010 Budget.

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

From 30 June 2010, cider duty rates are to be reduced. Follow the link below for further details.

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

The detailed Budget Report

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