Alistair Darling's second Budget had a feeling of déjà vu about it, rather like his first. Not only was it late – the latest Spring Budget since 1945 – but it was also even more heavily trailed than usual in the Pre-Budget Report (PBR) and last minute press leaks. With hindsight, it is clear that the Chancellor had already settled on a delayed Budget by last November. Hence his announcement of the income tax bands which are normally kept under wraps until the Budget proper.

UK and global economic conditions have worsened markedly since last November. Mr Darling's PBR projections for the economy to shrink by 0.75%-1.25% in 2009 looked optimistic as he announced them. They now are located at the fairytale end of the forecast spectrum. The revised figure for the performance of the UK economy– a contraction of 3.25%- 3.75% in 2009 followed by 1.25% growth in 2010 and 3.5% growth in 2011 – still looks on the rosy side. The IMF, for one, published gloomier predictions (-4.1% and -0.4%) on Budget Day. Two days later, National Statistics released figures showing that the economy had shrunk by 1.9% in the first quarter of 2009 alone. However, the Chancellor needed to keep his forecast on the relatively sunny side to avoid producing even larger deficits in his long-term forecasts.

The headline-grabbing moves in the Budget were the increases in tax for those with high incomes, both in terms of more tax and a reduction in the availability of tax relief on pension contributions. The attack on high earners appears more politically than financially targeted. Such are the deficits facing Mr Darling – £175bn this year and £173bn next year – that the extra £2.2bn revenue to be raised by these Budget measures in 2011/12 look little more than rounding errors.

In this month's news items we look at the main changes that will affect individuals and businesses and examine some of the related planning issues. If any of these strike a chord, you are strongly recommended to contact us for individual advice on 0845 463 0462.

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The contents of this Bulletin are based on the proposals put forward by the Chancellor in his Budget speech and explained in documents subsequently published by HMRC and the Treasury.
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