DFK UK & Ireland

Budget 2009

Alistair Darling has delivered the largest and most important Budget in recent times, comprising of 260 pages of economics, 222 pages of tax notes.

Quite a number of stimulus initiatives were announced; including £2.5bn to keep young unemployed people off the dole, help for pensioners, a scheme to encourage people to buy new cars and £1bn of investment in combating climate change. The stamp duty holiday will be extended and there will be an extra £500m to kick-start stalled housing projects.

However, it is not all good news. Borrowing this year will soar to a record £175 billion - with another £173 billion in 2010 - as the country battles with the worst global downturn in 60 years. Total government debt as a proportion of GDP will double to 79% by 2013. However it is predicted that the economy will begin to pick up by the end of this year, with growth of 1.25 per cent in 2010.

Individuals with incomes over £100,000pa will see quite a significant rise from next April. The top rate of tax is increased to 50%; personal allowances and some measure of pension contribution relief are withdrawn. Those with incomes between £100,000 - £113,000 will suffer 60% marginal tax on the income in that range.

For businesses, help for those that are loss-making will be extended and the main capital allowance rate on new expenditure will be doubled to 40% to encourage firms to bring forward investment. A new strategic investment fund of £750m will be introduced to help emerging technologies and regionally important sectors

Other than the points highlighted above, there is the usual raft of technical changes and closing of loopholes as well as the obligatory tax rises on alcohol, fuel and tobacco among others.

For a summary of Budget 2009, please click here.

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