Welcome to the 2008 Pre-Budget Newsletter from Connolly Accountants Ltd

Set against a backdrop of global economic uncertainty, Chancellor Alistair Darling has announced a raft of measures in this year's much-anticipated Pre-Budget Report, aimed at stimulating the economy and boosting consumer confidence.

Emphasising the wider global recession, and highlighting the crisis in the banking system as the cause of economic slowdown in the UK, the Chancellor announced that borrowing will increase to £78bn this year, and revised his economic growth forecast from 2.5% to 0.75% for 2008.

The Chancellor revealed a £20bn package, effective until April 2010, to help individuals and businesses to weather the storm. This includes some significant tax measures, with a cut in VAT from 17.5% to 15% for a period of 13 months, from 1 December.

The temporary increase in the basic personal tax allowance, worth £120 a year, has also been made permanent, and the tax reduction will rise to £145 in 2009/10. However, from 2011 those earning in excess of £150,000 a year will be subject to an income tax rate of 45%, and national insurance contributions will also rise by 0.5% from 2011.

The Chancellor announced help for businesses, in the form of a deferral of the 1p increase in corporation tax for small firms, and new measures allowing businesses to spread the payment of all taxes to HM Revenue & Customs. A temporary small business finance scheme worth £1bn will also be made available, and there will be an increase in the empty property relief threshold, as well as tax breaks for foreign dividends for medium and large firms.

Other measures announced include: additional support for mortgage holders; early increases in child benefit and the state pension; and a new state supported savings scheme.

For a detailed overview of the Pre-Budget Report and what it means for you and your business, visit our Report summary here.


WHAT THEY SAID

‘In these exceptional economic circumstances, I want to take fair and responsible steps to protect and support businesses and people now – while putting the public finances on the right path for the future.’ - Chancellor of the Exchequer, Alistair Darling

‘Listening to the Chancellor's speech, no one can be in any doubt that the Prime Minister's claim to have abolished boom and bust is one of the biggest deceits ever told to the British public.’ – Shadow Chancellor, George Osborne

‘If I were marking the Chancellor’s report card, I’d say ‘could do better.’ - David Frost, British Chambers of Commerce

‘Many of these measures […] will give small businesses a welcome breather from the taxman and allow them to concentrate on sustaining their business, supporting their staff and growing the economy in the long term.’- John Walker, Federation of Small Businesses


FOR THE FULL PRE-BUDGET ANNOUNCEMENTS VISIT:

http://www.hm-treasury.gov.uk/prebud_pbr08_index.htm


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2008 PBR: Darling cuts VAT to 15%
The Chancellor has slashed VAT from 17.5% to 15% in a bid to boost consumer spending.
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2008 PBR: the business reaction
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2008 PBR: the political reaction
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2008 PBR: Darling downgrades economic growth forecasts
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