George Osborne reveals details on "tough but fair budget”; VAT to rise in January 2011

VAT rises to 20 per cent

New chancellor George Osborne described his first budget, delivered this afternoon, as "the unavoidable budget".

According to the chancellor, the country is planning to tackle the bulk of the deficit through lower spending rather than higher taxes. However, he confirmed that VAT will rise to 20 per cent from January 4th 2011.

Osborne pitched it as: “A tough but fair budget.”

Key points included:
-VAT is rising to 20 per cent from January 4th 2011
-A rise in the employers NI threshold
-A drop in corporation tax from 28 per cent to 24 per cent over four years
-Small companies’ corporation tax will be cut to 20 per cent next year
-The process of increasing the state pension age to 66 is set to be sped up
-No duty increase on fuel

It was revealed that growth was lower than forecast in 2010 at 1.2 per cent, and is predicted to reach 2.3 per cent in 2011.

Osborne said the target is to eliminate current structural budget deficit by 2015/16.

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