High earners will be badly bruised by Wednesday’s Budget after Alistair Darling raised the highest rate of income tax to 50 per cent for those with salaries over £150,000 and restricted the tax-free allowance for people earning over £100,000.

The chancellor also limited the amount of income tax relief available on pension contributions for wealthy investors. Tax relief for those earning more than £150,000 will be reduced, with some investors seeing the rebate on contributions capped at the basic rate of 20 per cent from 2011. Previously relief was available at the full 40 per cent rate on contributions made by higher-rate taxpayers.

There was better news for savers and lower earning pensioners. The amount that can be paid into tax-free individual savings accounts (Isas) is extended from £7,200 to £10,200. Investors over the age of 50 will be able to make use of the larger annual allowance immediately and all other savers from next tax year. Up to half – £5,100 – of the enhanced allowance will be able to be saved as cash, and the remainder in other investments such as equities.

Some pensioners on modest incomes will also receive additional tax credits. Meanwhile, the over-80s will benefit from a higher winter fuel allowance of £100, for the second year running, while the over-60s will receive £50.

First-time buyers were handed some benefit as the stamp duty holiday for properties worth £175,000 or less was extended until the end of this year and more money was allocated to stimulate new housebuilding and support shared equity schemes.

Fuel duty will increase by 2p a litre, while taxes on alcohol and tobacco will increase by 2 per cent.