2009 United Kingdom budget

The 2009 United Kingdom Budget, officially known as Budget 2009: Building Britain's Future, was formally delivered by Alistair Darling in the House of Commons on 22 April 2009.[1] It introduced new tax, spending and debt rises in a financial environment of rising unemployment and recession.[2]

2009 (2009) United Kingdom Budget
Presented22 April 2009
Parliament54th
PartyLabour
ChancellorAlistair Darling
Total revenue£496 billion‡ (29% of 2008 GDP)
Total expenditures£671 billion (40% of 2008 GDP)
Deficit£175 billion (10.5% of 2008 GDP)
WebsiteBudget 2009: Building Britain's Future
‡Numbers in italics are projections.
‹ 2008
Pie chart of UK central government expenditure, 2009-10.

Details

To stimulate the motor industry, a £2,000 scrappage allowance was announced for a car more than 10 years old, if it is traded in for a new car and if it has been in the car buyer's ownership for the previous 12 months. £1,000 of this is to be provided by the government, and £1,000 by a motor manufacturer.[1] The scheme started about mid-May 2009 and was planned to finish at the end of February 2010; however, before it was due to end, it was extended by one month, to the end of March 2010.[3]

For high earners, a 50% tax band was announced for earners of over £150,000 per year to start in April 2010,[1] and tax relief on pension contributions was reduced progressively from 40% to 20% for annual incomes between £150,000 and £180,000 and to 20% above £180,000 commencing April 2011.[4]

Starting in April 2010, those with annual incomes over £100,000 would see their Personal allowance reduced by £1 for every £2 earned over £100,000, until the Personal allowance was reduced to zero, which (in 2010) would occur at an income of £112,950. This had the effect of creating an anomalous effective 60% marginal tax rate in the income band between £100,000 and £112,950, with the marginal tax rate returning to 40% above £112,950. As the Personal allowance has grown over the years, this has resulted in a corresponding increase in the size of the anomalous effective 60% tax band. As of 2018, the effective 60% marginal tax rate now arises for incomes between £100,000 and £123,700.

For savers, limits in Individual Savings Account (ISA) accounts were increased in two phases to a total of £10,200, including an additional £1,500 to the previous upper limit of £3,600 in a cash ISA. The first phase is for those over age 50 years, who can contribute additional amounts from 6 October 2009.[1]

Taxes
Receipts 2009-10 Revenues (£bn)
Income Tax 141
Value Added Tax (VAT) 64
National Insurance 98
Excise duties 44
Corporate Tax 35
Council Tax 25
Business rates 24
Other 67
Total Government revenue 496

Spending
Department 2009-10 Expenditure (£bn)
Social protection 189
Health 119
Education 88
Debt interest 28
Defence 38
Public order and safety 35
Personal social services 31
Housing and Environment 29
Transport 23
Industry, agriculture and employment 20
Other 72
Total Government spending 671

See also

References
  1. "At-a-glance: Budget 2009". BBC. 22 April 2009. Archived from the original on 25 April 2009. Retrieved 23 April 2009.
  2. Wright, Ben (22 April 2009). "Budget signals new political era". BBC. Archived from the original on 25 April 2009. Retrieved 23 April 2009.
  3. "Car Scrappage Scheme Extended!". www.carscrappage.co.uk. 2010. Archived from the original on 28 May 2010. Retrieved 21 May 2010.
  4. "Pensions blow for higher earners". BBC. 22 April 2009. Archived from the original on 25 April 2009. Retrieved 23 April 2009.
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