The Chancellor today delivered his Pre-Budget Report.
The extra ½% hike in national insurance rates for employers, employees and the self-employed from 2011 will not be appreciated. This – combined with the 2008 announcement – will mean a 1% charge, raising about £7 billion in 2011-12 and subsequently.
Individuals will see tax allowances and thresholds frozen at 2009-10 levels. National insurance rates and thresholds are also unchanged. The state pension will rise by 2.5% from April 2010 – meeting the guarantee to increase pensions by the lower of RPI and 2.5%. Other benefits and credits will rise by 1.5%.
The much-heralded bank bonus tax applies to bonuses over £25,000 payable from today to 5 April 2010. It covers individuals engaged in banking business (including building societies) and will be charged at a 50% rate. Taking account of the levy, national insurance and income tax, bonuses will bear an effective 68% tax.
The Chancellor also confirmed that VAT will go back to 17.5% from 1 January 2010 – just 22 shopping days left!