Budget Highlights

Pre-election Budget 'to support recovery and tackle the deficit'

In his last Budget before a much-anticipated General Election, and with the UK emerging from the 'deepest global recession for over 60 years', Chancellor Alistair Darling faced a delicate balancing act as he outlined a series of measures aimed at tackling the deficit while supporting economic recovery.

Reiterating his plan to halve the deficit within four years, the Chancellor revised his borrowing forecast for 2009/10 downwards from £178 billion to £167 billion, but also downgraded the economic growth forecast for 2011 to 3-3.5%.

Among the key measures announced was support for first time buyers, in the form of a two year stamp duty land tax relief on residential properties costing less than £250,000. This will be offset by a new 5% rate for properties worth over £1 million. Meanwhile, the inheritance tax threshold has been frozen for a further four years.

A £2.5 billion small business package aimed at boosting skills and innovation was also unveiled, with a temporary increase in small business rate relief taking effect from October, in addition to a doubling of the Annual Investment Allowance and the Entrepreneurs' Relief lifetime limit.

Revealing that the one-off tax on bank bonuses has raised £2 billion, Darling pledged support for a global tax on bank transactions and announced that UK citizens will be guaranteed the right to a basic bank account.

The 3p rise in fuel duty scheduled for April will now be phased in between April and January 2011. Duty on wine, beer and spirits will rise by 2% a year until 2013, while duty on cider will increase by 10% and tobacco duty will rise by 1%.

Other measures include a new £2 billion investment bank to back low-carbon industries, funding for 20,000 new university places, further measures to tackle tax avoidance, and an extension of the higher winter fuel allowance rate for another year.