Emergency Budget

The Chancellor today delivered his emergency budget, which he dubbed "unavoidable" in a bid to set the tone for a swathe of cuts to public spending and tax increases. The budget will form the backdrop to the forthcoming Comprehensive Spending Review, announced 20 October 2010, which will provide a breakdown of departmental cuts. 

Headline measures in today's budget include:

• Structural current deficit to be in balance by 2015 and debt to be falling as a percentage share of GDP 
• Spending cuts will account for 77 per cent of deficit reductions, while 23 per cent from tax rises 
• From 4 January 2011 VAT will be raised to 20 per cent 
• The income tax personal allowance will be increased by £1,000 to £7,475 
• The corporation tax rate will be cut by one per cent per year for four years, from 28 to 24 per cent and the small firms’ rate will be cut to 20 per cent. Capital and investment allowances will be reduced, but this will be delayed until 2012 
• Capital gains tax to be raised to 28 per cent for higher rate tax payers 
• A bank balance sheet levy will be introduced from January 2011 to eventually generate over £2 billion annually 
• From April 2011 the employer national insurance contributions threshold will rise by £21 a week above inflationary rises 
• No rises in alcohol, tobacco or fuel duty – alcohol and fuel duties, including air passenger duty, to be considered in the autumn 
• Part of Royal Mail to be sold off to raise investment capital 
• The government will implement the recommendations of the Dyson review into R&D tax credits and expand the enterprise finance guarantee scheme 
• The government will publish a White Paper on tackling regional economic differences in Britain later in the summer, followed by a paper on rebalancing the economy of Northern Ireland 

Full Budget document available here.