The split between winners and losers appears even more confused than usual given the complicated package of changes to income tax and National Insurance announced by Gordon Brown.

The big news was the surprise cut in the basic rate of income tax from 22 per cent to 20 per cent from April 2008. But the benefit of this new lower basic rate will be offset by other tax and National Insurance changes.

The 10 per cent rate of income tax is being abolished from 2008, adding at least £200 to most income tax bills.

National Insurance deductions – in effect tax by another name – will also rise for many taxpayers as a result of an increase in the upper earnings limit for NI and that limit’s alignment with the higher rate tax threshold at £43,000 from April 2009.

While the package of reforms, which Mr Brown described as a simplification, will not take effect for another year or so, he conceded that at least one in five households would be worse off.

Experts said the losers were more likely to be found among higher earners, partly as a result of the NI changes. “People on incomes of £43,000 or more could end up paying up to £1,000 more because of the NI change,” said Mike Warburton, senior tax partner at accountants Grant Thornton. “But some not very well-off people could also be worse off because of the withdrawal of the 10 per cent rate”.

Less ambiguous were the chancellor’s Budget goodies for pensioners. They are set to benefit from dramatically increased tax-free personal allowances.

About a half of pensioners already pay no tax on their incomes but an inflation-busting £1,180 increase in personal allowances for the over-65s in April 2008 will take another 580,000 pensioners out of the income tax system altogether. And a planned series of further increases will mean that by 2011 no pensioner over-75 will pay any tax on income of less than £10,000.

At the same time the chancellor announced grants of between £300 and £4,000 for pensioners installing insulation and central heating in their homes.

The 125,000 victims of collapsed final salary pension schemes were also offered extra help. The chancellor promised a further £6bn for the Financial Assistance Scheme (FAS) which was set up to help fund these lost pension benefits.

Savers gained in some areas of the Budget but lost out in others. There were modest increases in the amount savers can put into tax-free individual savings accounts (Isas). From April 2008, the annual investment allowance will rise from £7,000 to £7,200, of which £3,600 can be in cash. And despite the wider abolition of the 10 per cent income tax rate, it is being retained for savings income which might benefit some people with modest savings.

But those investors keen to pass on pension assets to heirs were disappointed. Some in the savings industry had hoped that the Treasury would reverse its decision made at the end of last year which, in effect, killed off pensions as inheritance tax-planning tools. But, despite widespread calls for change, punitive tax charges at death on pensions remain. Pension investors aged over 75 will still be able to pass on their pension assets to heirs upon death but these funds will be hit, in effect, by a tax charge of up to 82 per cent.

The Budget also put the nail into the coffin for pension term assurance, announcing that it was ending tax relief on this type of life cover, less than a year after its introduction under the “A-day” pension rules.

Additionally, there was disappointment for those hoping for more concessions on inheritance tax. The threshold will rise to £350,000 in 2010, but after the house price boom of recent years, IHT is likely to continue to hit growing numbers of estates.

Zero carbon homes up to £500,000 in value will be exempt from stamp duty until 2012, but drivers of gas guzzling 4x4s and other high-polluting vehicles will pay an increased £400 rate of road tax from next April.

By contrast smokers and drinkers got off relatively lightly: traditional increases in duty saw an extra 1p on a pint of beer, 5p on a bottle of wine and 11p on a packet of cigarettes. And in what has become accepted practice from Brown’s Budgets, duty on spirits remained frozen.

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