TAX

Corporation Tax
Corporation tax will be reduced by 1% in each year for the next four years, the rate will fall from today’s 28% to 27% next year, and then by a further 1% in 2012 to 26%. It will then be cut further until it reaches 24% in 2014. 
The small companies tax rate will be cut to 20%.

VAT
VAT will rise from 17.5% to 20% from 4 January 2011. The lower rate will remain at 5%. The measure is expected to raise £13bn. Food, books and children's clothes will remain exempt from the tax.

Capital Gains Tax
CGT will rise to 28% from midnight tonight for taxpayers earning over £40,000 a year. For low and middle earners, the rate of 18% will remain. The 10% lifetime limit for entrepreneurs’ relief rate will be extended from the first £2m to the first £5m of gains made over     a lifetime.
 

Income Tax
Personal income tax allowance to be increased by £1,000 in April next year to £7,475 - worth £170 a year to basic rate taxpayers.  But the threshold at which higher rate income tax becomes payable will be frozen.

National Insurance
The threshold at which employers are required to pay National Insurance for their employees will go up by £21 per week.

Businesses set up outside London and the south-east of England will not have to pay employers' national insurance contributions during their first year in business. The exemption is to be limited to a maximum of £5,000 per employee or £50,000 per firm, and can   be applied for at any time over the next three years.

Council Tax
Councils which propose low council tax increases will be offered extra funds to allow them to freeze the tax for one year from April 2011.

Landline Tax
The proposed landline tax to fund the rollout of fast broadband will be scrapped.

Alcohol and Tobacco
No new alcohol or tobacco duties.

Economy
• The UK economy is predicted to grow by 1.2 % this year, 2.3% next year, 2.8% in 2012, 2.9% in 2013 and 2.7% in both 2014 and in 2015.
• Consumer price inflation is expected to reach 2.7% by the end of 2010 before "
• The inflation target remains at 2%, as measured by the Consumer Prices Index
• Unemployment is forecasted to peak this year at 8.1% and then fall for each of the next four years, to reach 6.1% in 2015
• Government will not join the euro in this Parliament
• No further reductions in capital spending
• Public sector pay will be frozen for two years but safeguards will be introduced for those workers on less than £21,000
• The structural current deficit "should be in balance" by 2015-16
• The balance of spending cuts vs tax rises would be 77% to 23%
• Office for Budget Responsibility (OBR) predicts borrowing of £149 billion this year, £116 billion next year, £89 billion in 2012-13 and £60bn in 2013-14
• Borrowing will be 10.1% this year; by 2015-16 it will be 1.1 %; by the end of this parliament debt interest payments will be £3 billion a year lower than they would have been

Benefits
• Child benefit will be frozen for the next three years.
• Tax credits will be reduced for families earning over £40,000 next year.
• Health in pregnancy grant will be abolished from April 2011, the Sure Start maternity grant will be restricted to the first child
• Lone parents will be expected to look for work when their youngest child goes to school.
• From 2011 benefits, tax credits and public service pensions (except for the state pension and pension credit) will rise in line with the Consumer Price Index, rather than the, generally higher, Retail Price Index, saving over £6 billion a year by the end of the Parliament.
• New maximum limit of £400 a week will be applied to Housing Benefit, to save £1.8bn a year by the end of the Parliament.
• The government will introduce a medical assessment for Disability Living Allowance from 2013 for new and existing claimants.

Pensions
• The government will accelerate the increase in state pension age to 66.

Banks
• A bank levy will be introduced, which will apply to the balance sheets of UK banks and building societies and the UK operations of foreign banks. But smaller banks will not have to pay. It is expected to raise over £2bn a year.

Environment
• The government will "explore changes to the aviation tax system" such as switching from a per-passenger to a per-plane levy. It will consult on major changes.