PBR (1): VAT down, NI up

Chancellor Alistair Darling began his Pre Budget Report by promising 'protection and support for businesses'.

He also confirmed that VAT will be reduced from 17.5 per cent to 15 per cent from December 1 for 13 months.

He announced a range of measures he said would help small firms including time to pay all tax bills for small firms 'in trouble'. The planned increase in the small companies rate of corporation tax has been deferred, so the 2009 tax rate will be unchanged.

But rates of National Insurance will rise 0.5p from 2011.