Darling announces tax rises in Budget

In today’s Budget, Chancellor of the Exchequer Alistair Darling said the country is suffering as the economy is in the midst of its worst year since World War II.

In an attempt to drive the UK to recovery, the Chancellor unveiled a series of measures including tax rises and spending cuts.

Those earning in excess of £150,000 face a top tax rate of 50% from next April - a year earlier than planned, while this group of people will also see a cut back on tax relief on their pension contributions.

The new top rate of tax is a change of plan from the pre-Budget report last November and replaces the 45p new top rate.

According to the Chancellor, the tax raising measures would raise over £6 billion by 2012.

The Chancellor is forecasting that the UK will have to borrow a record £175 billion and admitted that the credit crunch and the recession meant that growth and deficit forecasts have completely changed.

According to reports, total Government debt will surge to 79% of GDP by 2013 - representing the highest level in 60 years.

Other measures include an increase of 2p per litre on fuel duty in September and then by 1p a litre above inflation each April for the next four years. From midnight tonight, alcohol duties will increase by 2%.

Meanwhile, savers over 50 received some good news as they have been given the opportunity to increase their tax free savings in their Isas, with the limit to increase from £7,200 to £10,200.

The change will happen from 6 October for the over 50s and for all other savers from April 2010.

In addition, there are plans to boost the struggling motor industry whereby a “car scrappage” scheme will be introduced.

The “scrappage scheme” will pay consumers £2,000 to get rid of their old car and replace it with a more environmentally friendly car. The scheme has already proved successful in Germany.

The scheme is also part of the Prime Minister’s pledge to make the UK the ‘electric car capital of Europe’. Mr Brown also hopes the move will revive the struggling car industry and create hundreds of thousands of jobs.

Other measures include more support for businesses and homeowners in difficulty, as well as helping to get people back into work quickly.

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