2010: Emergency Budget
2:50pm 22nd June 2010
(Updated 6:38am 24th June 2010)
The Youngest Chancellor in more than a century has been delivering his first budget.
He'd already told us its going to be tough but fair and we've all got a part to play in reducing the countrys debt. George Osborne's placed blame for the pain clearly at the door of the last Labour government, saying the years of debt and spending make it unavoidable.
He's promised to balance Britain's books within five years with 77% of the total savings made through spending reductions and 23% through tax increases.
Just to put that into a figure you can imagine at the moment the government debt per person is £13,000 - the Chancellor says if he doesnt act that will go up to over £20,500 a person.
SO how is the 2010 Emergency Budget going to effect you?
Public Sector Workers -Public sector workers have been hit harder than anticipated. They're now facing a TWO year pay freeze for anyone earning over 21 thousand pounds. Armed services will get their operational allowance doubled.
Welfare - Child benefit will be frozen for the next three years. The health in pregnancy grant has been axed. Sure Start will be restricted to the first child only, and single parents will be expected to look for work once their child is at school. There will be no new tax credits for infants, and the earnings threshold for welfare will be reduced.
There's a big shake-up planned for the housing benefits system. Claiments will be entitled to a smaller percentage of the average rent in the area. The level will also be capped at £20,000.
And there'll be a new medical assessment for disability allowances.
Banks - Banks have been hit with a new tax in the emergency budget. Some of their riskier investments will now be subject to a small levy, which is anticipated to bring in over two billion pounds a year.Some analysts are concerned this could drive business away from the UK, but it is a measure similar to the one already championed by Barack Obama. It's also hoped it will encourage more responsible trading as the tax will only apply to unsecured transactions.
Technology The broadband tax has gone. George Osborne has announced he's scrapping the charge, which was to be levied on every home with a fixed telephone line. Instead the government will support private companies that will provide internet broadband services. Extra money will also come from the surplus in the digital switchover fund in the TV licence fee.
VAT - VAT is going up. From next January, it'll be 20 per cent - from the current 17 and a half. The Chancellor claims it'll raise more than 13 billion pounds a year by the end of this Parliament.Newspapers, food, and children's clothing will remain exempt.
Capital Gains Tax - Capital Gains Tax IS going up but only for higher rate tax payers. They'll now pay 28 per cent from midnight tonight. For everyone else, it will stay at 18 per cent. Entrepreneurs will also be able to earn up to 5 million pounds before they are liable for CGT. That's up from 3 million.
Tax - Personal taxation allowances are going up by £1,000. This means the first £7475 pounds will be tax free. The chancellor George Osborne says that will mean 23 million people will be 170 pounds a year better off. 880 thousand people will pay no tax at all.
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