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Chancellor to slash VAT and hike high rate income tax

The Chancellor is expected to cut VAT and introduce a new higher rate of income tax of 45p for those earning over £150,000 per year.

Alistair Darling will give his pre-Budget speech at 3.30pm this afternoon and is expected to pay for a £12.5bn cut on VAT from 17.5 per cent to15 per cent by taxing the wealthy at a higher rate.

Darling is expected to extend the £120 cut on income tax for basic rate payers to compensate for the abolition of the 10p tax band.

Among the other measures Darling has been tipped to unveil this afternoon, are the deferral of a 1 per cent increase in small company corporation tax to help small businesses through the recession.

He is also expected to offer additional Government guarantees on loans to small businesses, offer a tax break to small companies with cashflow problems.

Moneymarketing.co.uk will be providing full news and analysis of the PBR from 3.30pm this afternoon.

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