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Key points of The 2009 Budget

Below are the key points of Chancellor Alistair Darling's 2nd Budget.

For the Full 2009 Budget Report, click on this link   

Here are key points from Chancellor Alistair Darling's 2nd Budget.

• British economy forecast to shrink in 2009 by 3.5%. Growth forecast for 2010: 1.25%; and 2011 onwards: 3.5% a year.

• Inflation (CPI) expected to reach 1% by end of 2009. RPI will fall to -3.5% by end of year.

• No income tax increases this year.

• Income tax rate on those earning more than £150,000 to increase from 45% to 50% from April next year, a year earlier than planned.

• Personal tax allowance of those earning over £100,000 to be withdrawn from next April.

• Pension tax relief restricted for those on incomes over £150,000 from April 2011. It will be gradually tapered to the same 20% rate received by most people.

• Fuel duty to rise by 2% from September and 1% above indexation every April for next four years.

• Tobacco duty to rise by 2% from 6pm today.

• Alcohol duties to rise by 2% from midnight.

Economics

• Public sector net borrowing of £175bn in 2009, some 12.4% of GDP; £173bn next year, then £140bn, £118bn and £97bn each following year.

• UK net debt, including the cost of stabilising the banking system, at 59% this year, 68% next year, and rising to 79% by 2013-14.

• Inflation target remains at 2%.

• Tax avoidance and evasion loopholes to be closed, resulting in £1bn of extra revenue over the next three years.

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 – worth £250 for over-60s and £400 for over-80s.

Housing

• Stamp duty holiday on homes under £175,000 extended until end of 2009.

• £80m extension to HomeBuy Direct – the government shared equity mortgage scheme, which has already received interest from over 32,000 people since September.

• £500m extra support for housing industry; £100m of this for local authorities to build energy-efficient housing.

• £50m to accelerate modernisation of housing for military families.

Savings

• Annual ISA limit to be increased from £7,200 to £10,200, half of which can be invested in cash. From this year for over-50s, from next year for others.

Business and employment

• Loss-making companies can reclaim tax paid on profits made in past three years. Average repayments of £4,000 expected for each year.

• Extension of scheme allowing businesses to defer tax bills.

• Support for companies' cash flow, with a top-up trade credit insurance scheme to match private sector trade credit insurance provision.

• Additional £1.7bn funding for jobseekers.

• From January 2010 everyone aged under 25 who has been unemployed for a year to get an offer of a job or a training place.

• £260m new money for training and subsidies, targeted to get the skills and/or experience needed in sectors with strong future demand.

• £250m extra this year to enable 16- to 17-year-olds to stay in education. £400m in next two years.

• Main capital allowance rate doubled to 40% to encourage firms to bring forward investment.

• £750m investment fund to provide financial support to emerging technologies and regionally important sectors.

• Enhanced tax relief to support investment of £50bn this year, including £10bn to support the communications sector and extend the broadband network.

• Incentives to encourage smaller North Sea oil fields to be brought into production.

Environment

• Car scrapping scheme offers £2,000 discount on new cars when vehicles over 10 years old are traded in.

• Carbon budget commits UK to reduce emissions by 35% by 2020.

• £435m extra support for energy efficiency measures for homes, businesses and public places.

• £525m new support for offshore wind power projects, intended to provide enough electricity for 3.5m households.

• £405m new funding for low-carbon technology projects.

• Most energy-efficient new power stations using combined heat and power (CHP) technology to be exempt from climate change levy.