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10 December 2009 Pre-Budget Report: Chancellor announces measures to 'secure recovery'

Chancellor Alistair Darling has presented his 2009 Pre-Budget Report to the House of Commons. In the context of the global recession, and with a General Election looming, this year's Speech is of particular significance.

In what he described as a 'critical time' for the economy, the Chancellor outlined a number of measures aimed at securing economic recovery and promoting growth.

Despite revising down his economic growth forecast from -3.5% to -4.75% for 2009, and increasing his borrowing forecast from £175 billion to £178 billion for 2009/10, the Chancellor insisted that there is 'growing evidence' of a return of global confidence and predicted that the economy will grow by 1-1.5% in 2010.

As previously planned, the temporary cut in VAT will end on 1 January 2010, with the standard rate reverting to 17.5%. The so-called stamp duty 'holiday' will come to an end at the same time.

Citing the need for 'difficult but essential choices', the Chancellor confirmed that national insurance contributions will rise by a further 0.5% from April 2011, while the starting point will be raised so that those earning less than £20,000 will not be affected.

Meanwhile, the planned 1% increase in corporation tax will be deferred for small businesses, leaving the rate unchanged for 2010. Empty property relief will also be extended from 2010/11 for business properties with rateable values below £18,000. Also of interest to the small business owner was the announcement of an extension to the loan guarantee scheme, for a period of one year.

In a bid to help homeowners, the mortgage interest scheme will be extended for a further six months. However, the inheritance tax threshold will be frozen at £325,000 until 2011.

The Chancellor also made a much-anticipated announcement regarding bankers' bonuses, with the introduction of a new one-off 50% tax on bonuses exceeding £25,000, payable by the banks.

Green measures announced in the Pre-Budget Report include the introduction of a new boiler scrappage scheme, and plans to complete the roll-out of new energy smart meters by 2020. Meanwhile, electric cars will be exempt from company car tax for first five years, and there will be a 100% first year capital allowance for electric vans.

The Chancellor also confirmed a new 50p tax on telephone landlines, which will be used to fund superfast broadband services.

We can advise you on how the Pre-Budget Report announcements affect you and your business – please contact us for assistance.