Tax
Emergency Budget: Economic growth to be hit |
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| Tax | |
| Written by Roberta Murray | |
| Tuesday, 22 June 2010 | |
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Chancellor George Osborne announced that VAT will rise to 20pc from January 4.
VAT currently stands at 17.5pc. The new forecasts come as a week after the Office for Budget Responsibility downgraded the UK's growth from earlier Treasury estimates under Alistair Darling of between 3 and 3.5pc to 2.6pc. Housing benefit will be reformed with a maximum limit of £400 a week, in a package saving £1.8bn a year by the end of the Parliament. Other benefits to be cut include the health in pregnancy grant while the Sure Start maternity grant will be restricted to the first child only and lone parents will be expected to look for work when their youngest child goes to school. But there will be an extra £150 a year for the poorest families, through changes to family tax credits to ensure, Mr Osborne said, child poverty reduction targets would be met. The government is also to introduce a medical assessment for Disability Living Allowance from 2013 for new and existing claimants. SMEs and the Emergency Budget “The national insurance exemption for new start-ups will be hugely welcomed by entrepreneurs, as SMEs will form the backbone of Britain's economic recovery and deserve to be given a break. “However, Osbourne's five year business taxation plan and cuts to corporation tax will make a negligible difference to the number of new start-ups in the coming years. People don't go into business because of tax incentives; they set up shop because they have great and inspiring ideas. “To truly encourage new entrepreneurs, many of them victims of the recession and unemployment, we need to offer training, sound advice and inspiration to help turn their ideas into bankable businesses. Long term employment is only going to be achieved by providing an environment in which would-be entrepreneurs can flourish. It's the grass-roots reforms to DirectGov and BusinessLink that Vince Cable will oversee at BIS that will make the real difference in encouraging kitchen table entrepreneurs.”
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