As a new financial year begins, millions of people will be trying to work out whether they will be better or worse off as a result of the tax changes that came into force yesterday.

The sums will be complicated because the changes cover income tax, national insurance, capital gains tax and individual savings accounts.

With income tax and NI the Government has done its usual trick of giving with one hand and taking with the other. The basic rate of income tax has been cut from 22p in the pound to 20p, but to balance this good news the old starting rate of 10p in the pound has been abolished. On top of this those who earn between £34,840 and £40,040 will face an extra hit as the NI rate goes up from 1 per cent to 11 per cent on this slice of income.

The result of all these changes is that those with modest incomes of £5,931 to £15,075 will be worse off as the loss of the 10p starting rate hits them disproportionately hard. Francesca Lagerberg, of the accountancy firm Grant Thornton, said: “Someone earning £7,455 would be worst off, with a tax increase of £152, but all those in this income band will suffer. They should check their tax credits position to ensure they are claiming all to which they are entitled.”

Many pensioners may have lost out because many of them are on modest incomes, but the Chancellor has offered them some special help. The personal allowance for those aged over 65 rises by 20 per cent to £9,030 while for those over 75 it goes up by a similar percentage to £9,180. The result is that a pensioner aged 66 with an income of £10,000 will be £77 a year better off.

Most of those earning more than £15,075 will be better off. They gain more than they lose from the tax changes and the raising of the higher rate tax threshold, even though some face a bigger NI charge. Ms Lagerberg said: “Best off will be those earning £34,840 who will pay £393 less tax and are just below the point at which the increased NI charges kick in. Everyone earning above £41,435 will have an extra £297 a year in their pockets.”

Among the losers are those earning £39,781 to £39,860. They will be slightly worse off because the NI increase outweighs the cut in basic rate tax.

Changes to capital gains tax (CGT) have also thrown up winners and losers. The old top rate of 40 per cent is being replaced by a flat rate of 18 per cent, but as a trade-off some reliefs have been abolished. This is good news for higher rate taxpayers owning non-business assets such as shares, funds and buy-to-let property. Their effective tax rate will fall from between 24 and 40 per cent to 18 per cent. Basic rate taxpayers holding the same investments could end up paying more CGT as their previous rate varied from 12 per cent to 20 per cent. They will now pay the flat 18 per cent.

But the real losers are those holding business assets such as entrepreneurs who have built up their own business and staff holding shares in their own company. Under the old rules they faced a CGT bill of 10 per cent once they had held the investment for two years. Now they face an 80 per cent increase in their CGT rate, from 10 per cent to 18 per cent. For basic rate taxpayers the change will be even greater as their old CGT rate on business assets could be as little as 5 per cent.

The Chancellor’s one big concession is the so-called entrepreneur’s relief. Individuals selling shares in a company in which they hold a stake of at least 5 per cent will be taxed at only 10 per cent, rather than 18 per cent, on the first £1 million of any gain.

There has been no change of heart by the Chancellor over plans to levy a charge on individuals living in the UK who claim non-domicile status. From April 6 non-doms who have lived in Britain for more than seven years will have to pay an annual charge of £30,000 to preserve their status or pay tax on their worldwide income and capital gains, rather than just their UK income and gains.

Alistair Darling boasted in his Budget speech that the Government was committed to encouraging more people to save. But there was little sign of this in the modest and much-trailed changes to individual savings accounts (Isas), the Government’s tax-privileged savings vehicle. The maximum that can be invested annually in an Isa rises by just £200 to £7,200. Within that overall limit the amount that can be placed in a cash Isa rises by £600 to £3,600. Jason Hollands, of the investment house F&C, said: “This is a pretty disappointing result, given that the limits had not changed since Isas were introduced in 1999.”

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