Emergency Budget 22 June 2010 Tax & Benefits related Key Points

Taxes

  1. Corporation tax, currently 28%, to fall by 1p in the pound a year for four consecutive years until it reaches 24%.
  2. Small companies tax to fall to 20%.
  3. New firms outside south-east/east to be let off employer national insurance contributions, up to £5,000, for each of first 10 employees recruited.
  4. VAT to increase to 20% on 4 January next year.
  5. Freeze council tax for one year from April next year.
  6. Capital gains tax, currently 18%, to increase for higher earners to 28% from midnight. Low and middle-income savers will continue to pay 18%
  7. Personal income tax allowance to be raised by £1,000 from April to £7,475.
  8. Higher rate income tax threshold frozen until 2013.
  9. The standard rate of insurance premium tax to rise from 5% to 6% and the higher rate to increase from 17.5% to 20%.

Benefits

  1. Benefits, tax credits and public service pensions will increase in line with consumer prices (CPI)rather than the retail price index (RPI).
  2. Child benefit to be frozen for the next three years.
  3. Caps on housing benefit to be introduced – from £280 a week for a one-bedroom property to £400 a week for a four-bedroom or larger.
  4. Sure start maternity grant will go to the first child only.
  5. Eligibility for child tax credits to be reduced for families with a household income of more than £40,000 from April next year
  6. The baby element of child tax credit will be abolished from April next year
  7. Child element of the child tax credit to increase by £150 above indexation next year.

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