Clause 1
Finance Bill
10:30 am
Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
We announced in the pre-Budget report and confirmed in the Budget that the basic rate of tax would remain at 20 per cent. and the higher rate of tax at 40 per cent. for the current tax year. As part of a package of measures, we reduced the basic rate to 20 per cent. from 2008-09, which is the lowest rate for more than 75 years, with the 40 per cent. higher rate continuing to apply to higher-rate taxpayers. Taken with the other changes made to personal tax, basic-rate taxpayers are £145 a year better off in April 2009 compared with April 2008. In 2009-10, 21 million households will gain, on average, by about £6 a week compared with April last year.
The tax rates for this year will continue to preserve the two-rate structure for the vast majority of taxpayers. In the pre-Budget report we set out support to low and middle-income families—to help during the global economic downturn—and the fiscal consolidation measures that we would need in the medium term. All of those changes together mean that no one with an income less than £100,000 will see an income tax rise in 2010-11, when the increases take effect. The measures for 2010-11 announced in the Budget will focus only on the highest 2 per cent. of incomes, those above £100,000 a year—the opportunity to debate those matters will come later.