Council Tax in England to be frozen in Budget

Monday, 21 June 2010 11:25

By myfinances.co.uk staff

The government will press ahead with plans to freeze council tax in England next year while the chancellor has also confirmed he will raise capital gains tax (CGT).

According to the BBC the chancellor will announce a freeze in council tax tomorrow for England despite the budget deficit.

The move is being seen as an attempt to soften the blow of what are anticipated to be sweeping spending cuts and tax rises. Various newspapers report that VAT and CGT are set to rise.

Meanwhile, Labour MP John Hutton has been asked by the coalition government to head a commission into public sector pensions.

The Conservative election manifesto promised a two-year freeze in Council Tax, and the coalition agreement between the Conservatives and Liberal Democrats said it would be frozen "for at least one year" with aspirations to extend this into a second year.

Mr Osborne told the BBC on Sunday the coalition had inherited "a truly awful financial situation" and he would set out a four-year plan to deal with it.

Tough action was "unavoidable" but he aimed to provide "prosperity for all".

If action was not taken, he said, "we will find higher interest rates, businesses going bust, unemployment rising and our living standards declining. I am not prepared to put up with that," he said.

The BBC said it believed the coming Budget will also include Conservative election proposals to ease National Insurance (NI) for new businesses.

It is expected the employers' threshold for NI will rise slightly - by £21 - and Universities Minister David Willetts confirmed there would be measures to boost firms outside of the South East of England.

This is expected to take the form of a three-year scheme to exempt start-up firms elsewhere in the UK from paying NI for the first 10 people employed.

Mr Osborne also confirmed there would be a levy on banks.

While Mr Osborne declined to set out more detail of what would be in Tuesday's Budget, Prime Minister David Cameron has already suggested public sector pay and pensions will have to be restrained.

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