Budget Report - VAT rates cut.

Mr Darling has cut VAT by 2.5% which should see you saving of a couple of quid when buying an iPod or a few pence when buying a CD. Hopefully along with the lower petrol prices, which should now be saving you a few pounds each week, this will bring confidence back to consumers. And although the killjoys are asking how a couple of pounds off an iPod is going to help them, I've figured out that if you're looking at buying a new car at the moment, you should be treated to a saving of over £300 with today's rate cuts on a family hatchback! Terrific!

However you may notice I've used the word 'should'. These VAT rate cuts today are all dependent, as much as the interest rate cuts, in businesses passing those on. I would imagine these cuts will take a while to be fully implimented, especially with small businesses, due to the process of having labels, menu's, leaflets and adverts re-printed with the adjusted VAT.

SME's do have a lot of support though from this Budget. They should see extra money coming in each month due to being able to spread their VAT, corporation tax and NI contribution payments over a longer period and a tax repayment scheme for previously profitable businesses will be extended so up to £50,000 of losses can be offset against profits made over last three years. SME's will also be able to dive into a £4bn help fund which has been agreed between the European Investment Bank & UK banks.

Although this Budget doesn't bring good news for high earners. If you earn over £150,000, you will now be paying 45% tax. Yikes!

We are in no doubt living in tough times, Honda have closed their factory in Swindon for several months over the Winter due to lack of orders, so have Bentley in Crewe and today America have bailed out one of the largest banks in the world, Citi Group, however with every little bit of help, breeds a little bit of confidence and this was seen today with a 10 point rise in the FTSE, it's biggest ever in history.

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