22/04/2009

Budget 2009: Top Earners To Be Taxed Up To 50%

Top earners in the UK face a top tax rate of 50%, the Chancellor Alistair Darling has announced today in his 2009 Budget.

Delivering his second Budget in the House of Commons, Mr Darling acknowledged Britain is facing the deepest recession since the Second World War and admitted the economy would suffer as a result.

Warning that output would shrink by 3.5% this year - more then doubling his previous forecast - he added that Britain would borrow an additional £703bn over five years.

Mr Darling said the 50p tax rate - which replaces the 45p new top rate announced in November's pre-budget report - will only apply to the few earning over £150,000 per year, who will also see tax relief on their pension contributions curbed.

The new rate will begin in April 2010,a year earlier than planned.

The Chancellor announced petrol duty would be raised by 2p in September, while alcohol has risen by 2% - effective from midnight - and tobacco will rise by 2% from 6pm this evening.

Referring to the global economic downturn as the "worst in 60 years" he said the budget would build on the "strengths of the economy and its people and help speed recovery".

Mr Darling said the impact of the global recession was being felt in every continent, country and community.

He told the Commons: "When the world economy was plunged into deep crisis in the 1930s, the response, both nationally and internationally, was too little and too late.

"This failure to act turned a serious downturn into a prolonged depression. We will not repeat those mistakes again."

He said international governments had taken action and "this action, taken promptly and decisively, gives us good grounds for confidence".

Mr Darling announced a number of packages to help families, including a child tax increase to £120 from next April. He also said the Government would protect investment in schools, hospitals and other key public services, while rebuilding the financial services sector.

Statutory redundancy pay would increase from £350 to £380 and cold weather payments for pensioners would remain at £250 and £400.

There will also be more assistance to get people back into work quickly and support businesses and homeowners facing problems.

Everyone under the age of 25 out of work for 12 months or more will be offered a job or a place on a training scheme. The government will also create or support up to 250,000 jobs in deprived areas.

The Chancellor announced £250 million and then £450 million over the next to years to maintain 54,000 sixth form places.

As expected stamp duty holiday on homes up to £175,000 were extended to end of year.

In an attempt to boost the ailing motor industry, a car-scrappage scheme is to be introduced. Anyone with a car registered before December 31 1999 will get a cash incentive of £2,000 to trade their old vehicle for a brand new one.

Conservative Leader David Cameron, however, said the Budget had not done enough to get spending under control and "Britain simply cannot afford another five years of Labour".

In a scathing attack, he added: "As of today any claim they have ever made to economic competence is dead, over, finished."

(JM/BMcC)

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