Emergency budget shocks
Published: 22 June, 2010
UK: George Osborne's much-trailed emergency budget shocked with the scale of cuts – 25% for non ring-fenced departments – and tax rises.
VAT will increase from January to 20%. Zero rated items remain unchanged but only for the life of this parliament. The VAT increase will generate over £30bn a year of extra revenue.
Corporation tax, currently at 28%, is to fall by 1p in the pound a year for four consecutive years until it reaches 24%. Small companies tax is to fall to 20%.
New firms outside south-east/east to be let off employer national insurance contributions, up to £5000, for each of first 10 employees recruited.
Capital gains tax, currently 18%, to increase for higher earners to 28% from midnight.
Personal income tax allowance to be raised by £1000 from April to £7475. Will take 880 000 people out of tax altogether. Higher rate income tax threshold frozen until 2013.
A levy on banks will be introduced in January next year and there will be no increase in duties on drinks, cigarettes, and fuel.
• Growth in the UK economy for the coming years is estimated to be 1.2% this year, 2.3% next year, then 2.8% in 2012.
• Consumer price inflation is expected to reach 2.7% by the end of the year returning to target in the medium term
• 77% of total consolidation to be achieved through spending reductions and 23% through tax increases.