The Chancellor of the Exchequer delivered his Pre-Budget Report to Parliament on Monday 24 November at 3.30pm. The headline item on Pre-Budget report was undoubtedly the reduction in the top rate of VAT to 15%, effective 1 December, but there were other items taking immediate effect to note, including the Business Payment Support Service.

The main tax changes include:

• temporarily reducing the Value Added Tax (VAT) rate to 15 per cent with effect from 1 December 2008 to 31 December 2009;
• restricting the income tax personal allowance for those with incomes over £100,000 from April 2010;
• introducing a new additional higher rate of income tax of 45 per cent for those with incomes above £150,000 from April 2011;
• increasing the employee, employer and self-employed rates of national insurance contributions by 0.5 per cent from April 2011;
• increasing alcohol and tobacco duties as a quid pro quo for the VAT reduction, but maintaining these increases after December 2009
• a two pence per litre increase in fuel duty from 1 December 2008;
• making permanent the £600 increase in the income tax personal allowance announced in May 2008 with a further increase of £130;
• enhanced loss relief for businesses now making losses;
• the modification of a number of planned tax reforms, including vehicle excise duty, air passenger duty, and
• the deferral of the increase in the small companies’ rate of corporation tax.

Further ICAI commentary is available in Section 2.03.