Budget changes - what you need to know!

VAT - VAT is set to rise to 20% from 4 January 2011.

Income tax: Personal income tax allowance is to be raised by £1,000 from April 2011 to £7,475.

National Insurance contributions - Any company set up outside London, the south-east or the eastern region will not have to pay employer National Insurance contributions (NICs) for its first year in business. Firms will be able to apply for the tax cut at any time over the next three years up to a maximum of £5,000 per employee or £50,000 per firm.

Public sector - Public sector workers earning more than £21,000 will face a pay freeze for two years. People earning less than that will each receive a flat pay rise worth £250 each year.

Welfare - Benefits, tax credits and public service pensions are to increase in line with consumer prices, rather than the retail price index.

Caps on housing benefit will also be introduced – from £280 a week for a one-bedroom property to £400 a week for a four-bedroom or larger.

Child benefit is frozen for three years.  Child tax credits are to be withdrawn from families earning more than £40,000 (previously £50,000).

The baby element of the tax credit known as Sure Start, which is a one-off payment to help towards the cost of a new baby will be abolished.  The health in pregnancy grant of £150 will be scrapped from 2011.

Other:

Fuel, cigarettes and alcohol duty remained untouched.