In a Budget that the Chancellor, George Osborne, described as 'unavoidable' he announced that VAT will rise to 20% from 4 January 2011. The rise, alongside a raft of spending cuts, will help see the country's deficit fall to 1.1% of gross domestic product by 2014-15 from its current level of 11%.However, Mr Osborne admitted that the measures will have an impact on growth. The economy will grow just 1.2pc this year, 2.3pc next year and 2.8pc in 2012.
Corporation tax will be cut from 28% to 27% next year, and by 1% annually for the following three years. The rate for small companies will also be cut to 20%.
The threshold at which employers start to pay National Insurance will rise by £21 a week above indexation from April, the chancellor said.
“Reform of the corporate tax regime will help rebalance the economy away from household debt and government consumption", Mr Osborne said.
In other key measures the Chancellor announced a major adjustment of the welfare package including an abolition of tax cedits for families earning more than £40K pa. He outlined increases to personal income tax allowances - up £1000 to £7475 - and an increase in Capital Gains Tax for higher earners to 28%. Perhaps most popularly Mr Osborne announced the introduction of a Bank Levy which he forecast would generate £2 billion pa from Jan 2011 for the Treasury.
A more detailed analysis will be available to APA Members in the Knowledge Zone from tonight.
Gareth Osborne, APA. (no relation)
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