Alistair Darling has delivered his Pre Budget Report (PBR) with his stated overriding aim to secure the recovery of the economy rather than wreck it.
Chief amongst the announcements was a further 0.5% rise in all employer, employee and self-employed rates of National Insurance from April 2011, although those earning less than £20K will be exempt.
Bankers also took a battering as a one-off 50% tax on bonuses over £25K was introduced in an attempt to persuade banks to rebuild their balance sheets instead.
It was also confirmed that VAT will return to 17.5% on 1 January 2010, having been at 15% for the past year in an attempt to boost consumer spending and get the economy back on its feet.
Pensioners received better news after it was revealed the basic state pension will rise by 2.5% in April next year. Normally being linked to the retail prices index , which has been negative for much of the year, it had been feared an increase might not be forthcoming.
Meanwhile, the inheritance tax threshold is to be held at £325K until 2011.
Of interest to homeowners will be the introduction of a boiler scrappage scheme, similar in nature to the car scrappage scheme that has recently been in operation.
However, the Chancellor declined to grant an extension of the stamp duty holiday for properties up to £175K, much to the frustration of homebuyers.
"The decision to end the stamp duty holiday is a disappointing one and this could dampen the positive signs in the housing market that we have seen over the past few months," said Darren Cook, spokesperson for Moneyfacts.co.uk.
"First time buyers, the current lifeblood of the market, will be hard hit as not only will they need to raise a considerable deposit, but will also need to find the budget for an additional £1,250 plus tax bill."
On a wider scale, Mr Darling forecast that the economy will shrink by 4.75% this year, much worse than the 3.5% drop he had predicted back in April.
However, the country is expected to come out of recession before the end of the year, with growth of between 1% and 1.5% anticipated next year.
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