Pre-Budget Report 2009 - Initial reactions

"The commentaries below are written in general terms. Details can also be found in our downloadable Pre-Budget Report brochure. You are strongly recommended to seek specific advice before taking any action based on the information given, both in the commentaries and in the publication."

PBR: pain to be shared by all – but tomorrow

NIC rises means it’s not just high earners caught by PBR

Richard Mannion, national tax director says: 

"Putting off the pain for the moment under the guise of protecting a fragile recovery, the Chancellor will be hitting all employees earning more than £20,000 pa with an extra NI costs from 2011. This alone will bring in about another £3billion a year. This NI increase is in addition to the extra half percent already announced in PBR 2008.

However, the Chancellor clearly singled out bankers, other high earners and tax avoiders as having the shoulders broad enough to help fund the deficit.

The Chancellor has clearly decided to highlight the Opposition's inheritance tax plans to increase thresholds, by freezing the amount that can be left without a tax charge at the current rates.

Among the winners were smaller businesses. They see a stay of execution on an increase in corporation tax which will be of some comfort to some 800,000 small businesses which were due to be caught. Smaller business will also benefit from an extension to the Enterprise Finance Guarantee Scheme which has been extended by 12 months and the continued support for the Business Support Scheme. 

This PBR may have seemed like an easy ride, but Mr Darling clearly has one eye on next year’s election. So the bottom line clearly is pain tomorrow."