The Chancellor announced a number of changes to tax rates and allowances in his emergency Budget, covering Income Tax, National Insurance Contributions, the State Pension, Banks, and Child Tax Credits.

In 2011-12, the income tax personal allowance for under 65s will be increased by £1,000 in cash terms, taking it from £6,475 in 2010-11 to £7,475 in 2011-12.

To ensure the majority of higher rate taxpayers will pay the same total level of income tax and National Insurance Contributions (NICs) as previously planned, the government will also reduce the basic rate limit for tax by £2,500, and the upper earnings and profits limits for NI Contributions by £1,650, based on current estimates of the Retail Prices Index (RPI).

Exact figures for the basic rate limit and higher rate threshold will be confirmed in the autumn. The level at which employers start to pay NICs will increase by £21 per week above indexation from April 2011.

The value of indexation will be determined by data available in the autumn.

The government will shortly announce a three-year scheme to exempt new businesses in targeted regions from up to £5,000 of class 1 employer NICs payments, for each of their first ten employees hired in their first year of business.

The government will uprate the basic state pension by a triple guarantee of the highest of earnings, prices or 2.5 per cent from April 2011.

The CPI will be used as the measure of prices, although the basic state pension will increase by at least the equivalent of the Retail Prices Index (RPI) in April 211 to ensure its value is at least as generous as under previous uprating rules.

The standard minimum income guarantee in pension credit will increase in April 2011 by the cash rise in a full basic state pension.

The Chancellor also announced several changes to the child and working tax credit. The child element of the Child Tax Credit will increase by £150 above CPI in April 2011, while the baby element of the Child Tax Credit will be removed from April 2011.

From 2011-12, both rates of child benefit will be frozen for three years.

There will also be annual reductions to the main rate of corporation tax. The main rate of Corporation Tax will be reduced to 27 per cent in 2011-12, with further reductions to 26 per cent in 2012-13, 25 per cent in 2013-14 and 24 per cent in 2014-15.

The Chancellor also announced a reduction in the small profits rate of Corporation Tax to 20 per cent from April 2011.

Lastly, a bank levy based on banks' balance sheets will be introduced, effective from 1 January 2011. It is proposed the levy will be set at a rate of 0.07 per cent, with a lower initial rate of 0.04 per cent in 2011.