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Budget 2009 Predictions: The chancellor may postpone higher band income tax increases announced in pre-Budget report


The Government could defer several of the tax increases it announced for 2010 and 2011 due to the deepening recession, according to chartered accountants MacIntyre Hudson.

In the pre-Budget report in November, the chancellor, Alistair Darling, announced it would raise the income tax band for staff on a salary of more than £150,000 from 40% to 45% by 2010, but Patrick King, tax principal at MacIntyre Hudson, explains Darling could postpone the increases, but announce steeper tax rises in future years to finance government borrowing.

King said: "In November Darling announced a fiscal stimulus for 2009, with tax rises starting to kick in from April 2010. At the time he was forecasting the economy would return to growth by mid-2009. He has already conceded this forecast was wide of the mark, and his Budget is likely to predict Britain will remain in recession for the whole of this year, and possibly into early 2010.

"Even if the UK sees growth in 2010, it is likely to be unsteady and anaemic at best. Against this backdrop, the tax rises already announced for 2010 and 2011 will take money out of the economy at a time when it will still be weak, a policy that both the chancellor and the prime minister have previously set themselves against."