The Budget 2009: Wow's Verdict

22nd April 2009

The Chancellor, Alistair Darling is hoping for a swift recovery for the Economy, optimistically forecasting that it would start to grow by the end of 2009. At the same time, he announced that debt would reach £175bn this year.

Some of the headlines were the introduction of a new top tax rate of 50% for those earning more than £150,000 from next April, tax relief on pension contributions for high-earners is to be cut, ISA limit to rise to £10,200 (of which £5,100 can be cash) from next year and Stamp duty holiday on properties under £175k extended to the end of the year.

For a more in-depth discussion of how the 2009 Budget may affect your personal situation, feel free to call the Wow team on 0845 201 1582 or e-mail info@thewowcompany.com with your queries. We will be able to answer them from Thursday morning.

You can also visit the Wow Blog at http://wowcompany.blogspot.com/ to discuss your thoughts on today's Budget. In the meantime, here are the main points:

The Economy

• UK Economy predicted to shrink by 3.5% in 2009 (the previous prediction was 1%)
• National Debt is to rise to 79% of GDP by 2013.
• Inflation predicted to be at 1% by end of 2009
• Economy predicted to start growing again by the end of 2009
  

Tax and Financial Planning

• Annual limit for tax-free ISAs to rise to £10,200 for over-50s this year and from April 2010 for everyone else
• From April 2010, an additional rate of income tax of 50 per cent will apply to income over £150,000. The income tax personal allowance will be restricted for those with incomes over £100,000
• From April 2010, tax relief on pension contributions will be restricted for those with incomes of £150,000 and over, and tapered down until it is 20 per cent

What does the 2009 Budget mean for Small Businesses ?

In his opening speech, the Chancellor said that a key objective of this Budget was to help businesses. Here are some of the main points:

• The relief for taxable losses has been extended to allow carry back of losses of up to £50,000 for a further two accounting periods. It may be worth businesses considering changing their accounting date to maximise the benefit of the extended loss relief provisions.

• A temporary increase in capital allowances to 40 per cent for one year will be implemented from April 2009, to allow a higher proportion of private investment to be offset in that year against taxable profits
• A 'top-up' trade credit insurance scheme to help businesses maintain their finances, in which the Government will offer to match private sector trade credit insurance provision, for a temporary period, if insurers reduce cover to any UK business

Housing

• A £600 million funding package of measures to build more homes through unlocking sites currently sitting dormant
• An extension of the stamp duty holiday for all houses costing up to £175,000 until 31 December 2009.

Motoring

• For a temporary period, a vehicle scrappage scheme will be introduced, co-funded with industry, that will enable consumers who scrap vehicles older than ten years to replace them with a brand new vehicle at a discount of £2,000.
• Fuel duty will increase by 2 pence per litre on 1 September 2009, and by 1 pence per litre in real terms each year from 2010 to 2013
  

Visit the Wow Blog at http://wowcompany.blogspot.com/ to discuss your thoughts on today's Budget.

For a more in-depth discussion of how the 2009 Budget may affect your personal situation, feel free to call the Wow team on 0845 201 1582 or e-mail info@thewowcompany.com with your queries. We will be able to answer them from Thursday morning.