Budget 2009 at a glance
Were you a winner or a loser?
The chancellor Alistair Darling unveiled plans during his second Budget speech to increase taxes for the
highest paid, rein in public spending and substantially increase borrowing to restore the public finances.
The economy is forecast to contract by 3.5pc in 2009, but growth is expected to resume “towards the end of the year” according to the chancellor.
Take a look at our guide and see how your finances could be affected by Budget 2009.
Budget 2009 highlights
The Economy – Growth
The UK economy contracted by 1.6pc in the last quarter of 2008. GDP growth for the year as a whole expected to be -3.5pc.
Growth forecast of 1.25pc in 2010. From 2011, the economy will continue to recover with growth of 3.5pc from then on. In future years the economy will recover towards a trend rate of growth of around 2.75pc.
Inflation is expected to reach 1pc by the end of this year. The Bank of England inflation target remains unchanged at 2pc. RPI inflation is forecast to remain negative, falling to minus-3pc by September, before moving back above zero next year.
The Economy - Borrowing
UK figures for public sector net borrowing will be £175bn this year, 12.4pc of GDP. From 2010, borrowing will fall to £173bn, then £140bn, £118bn and £97bn.
As a share of GDP, borrowing will be 11.9pc next year, 9.1pc in 2011/12, then 7.2pc in 2012/13 and 5.5pc in 2013/14.
UK net debt, including the cost of stabilising the banking system, will as a share of GDP increase from 59pc this year to 68pc next year, 74pc in 2011/12, then 78pc and 79pc in subsequent years. It will stabilise and then begin to fall in 2015/16.
The UK’s current deficit is expected to halve within
four years.
Income tax
New 50pc tax rate introduced for those earning more than £150,000 to take effect from April 6, 2010.
Personal allowances to be fully withdrawn for those with incomes over £100,000 from April 6, 2010.
No income tax increases this year.
Pensions
From April 2011, pension tax relief for those with incomes over £150,000 will be restricted so it is gradually tapered to the 20pc rate.
Basic state pension increased by at least 2.5pc, regardless of the Retail Price Index.
Capital disregard on Pension Credit is to be raised from £6,000 to £10,000 from November 2009.
Education
£250m will be provided this year and £400m in 2010/11 for an additional 54,000 places in sixth form and further education colleges, with consequential provisions for Scotland, Wales and Northern.
Housing
The stamp duty holiday on properties sold for less than £175,000 will be extended until the end of 2009.
An extra £80m is to be given to the HomeBuy Direct, the government’s shared equity mortgage scheme.
An extra £1bn will be provided to help homeowners and boost housing.
A scheme will be introduced
to guarantee securities backed by mortgages in a bid to
increase lending.
£500m of extra financial support will be provided for housing projects, including £100m for councils to build new energy-efficient housing.
£50m to accelerate the modernisation of housing for military families.
Environment
£435m extra support for energy efficiency measures for homes, businesses and public places.
Additional £1bn to help combat climate change by supporting low-carbon industries and green jobs.
£525m of new support will be given over the next two years for offshore wind projects.
£405m to encourage
low-carbon energy and advanced green manufacturing in Britain to drive new technology and investment in small-scale projects.
Most energy-efficient new power stations using combined heat and power (CHP) technology to be exempt from climate change levy.
Jobs
An additional £1.7bn for Job Centre Plus and the New Deal is to be provided.
Additional support for people who have been out of work for 12 months.
From January everyone under the age of 25 who has been jobless for 12 months will be offered a job or a place in training.
£260m of new money allocated for training and subsidies for young people to help them gain skills and experience.
Statutory redundancy pay
will increase from £350 to £380 a week.
Welfare
The child element of the Child Tax Credit to increase by £20 from April next year.
£100 extra for child trust fund vouchers for new babies with disabilities, extra £200 for
those with severe disabilities.
State redundancy pay to rise from £350 to £380 a week.
Grandparent care for young relatives to count towards basic state pension.
Last year’s increase in winter fuel allowance to be extended for another year, £250 for over-60s and £400 for over-80s.
Savings
Annual Individual Savings Account limit to be increased from £7,200 to £10,200, half of which can be invested in cash. New limit introduced this year for over-50s, next year for all other savers.
Pensioners
Pensioners’ Winter Fuel Allowance is to be kept at the higher level of £250 for over-60s and £400 for over-80s for another year.
Tax avoidance
The aim is to raise £1bn of extra revenue over the next three years by closing tax loopholes and schemes.
Government
Efficiency savings from 2011 are expected to give a further £9bn of additional savings a year by 2013/14.
Financial services
Treasury paper to be published with recommendations for wide-ranging reform of financial services, including action to reduce the impact of the failure of financial firms.
Motoring
A car scrappage scheme introduced from this May to provide motorists with a £2,000 discount on new vehicles bought when they trade in cars over 10 years old. The scheme will end in March 2010.
Other announcements
Alcohol duties increased by 2pc.
Tobacco duty increased by 2pc.
Fuel duty will increase by 2p per litre in September and then by 1p a litre above indexation each April for the next four years.
