What is happening to income tax?

The first big change is that from April 2010 the personal allowance – the amount of income on which you pay no tax – will be clawed back for higher earners. The allowance is currently £6,035 and goes up to £6,475 from next April.

From April 2010, if your income is above £100,000, the amount of the allowance will be reduced by £1 for every £2 above the income limit until it comes down to half the basic personal allowance.

If your income is above a second limit of £140,000, the allowance will be clawed back at the same rate but this time you could lose the entire personal allowance.

The following year will see another big change when the top rate of income tax, including on savings income, will go up to 45 per cent above £150,000.

Someone on around £150,000 could be as much as £10,000 worse off as a result of the changes.

The chancellor also hit shareholders with a new top rate of 37.5 per cent on dividend income, while trusts will also face a new higher rate of 40 per cent.

Carolyn Steppler, associate partner at KPMG in the UK, said: “There are many winners and losers in today’s r eport, but possibly the biggest losers look set to be those earning between both £100,000 to £106,500 and £140,000 to £146,500. Due to the gradual withdrawal of the personal tax allowance, earners in these income brackets will effectively be paying a 50% rate of tax – by a strange quirk of the system, more even than the now well-heralded 45 per cent rate for those earning £150 ,000 plus!”

Doesn’t this affect only higher earners?

Yes and no. The government claimed its income-tax changes will affect only the top 1 per cent of earners, but its changes to national insurance contributions (Nics) will affect many more people.

From April 2010, Nics will go up by 0.5 per cent to 11.5 per cent on earnings up to around £44,000 and to 1.5 per cent above that.

Wasn’t there some good news on income tax?

Yes, the chancellor made permanent some concessions introduced earlier this year. In last year’s budget, the government abolished the 10p income tax rate, to pay for a 2p reduction in the basic tax rate from 22 per cent to 20 per cent. However, the move brought a backlash, forcing Darling to raise everyone’s personal allowance by £600, backdated to April 6. That was worth £120 for all 22m taxpayers.

The chancellor announced today that this increase will be made permanent, with a further increase of £130 in April, worth another £25.

Was there any other help?

Yes, April’s increase in child benefit – worth an average of £22 – will be bought forward to January, while the above inflation-increase in the child element of the child tax credit will be bought forward by a year to April.

What help was there for pensioners?

In April 2009 the state pension will rise in line with prices to £95.25 a week. In addition, the government announced that it will make a payment in the new year of £60 for each pensioner, equivalent to bringing forward April’s rise.

However, this was offset by an effective tax hike for the pensions of higher earners.

From April 2011, the lifetime and annual allowances for tax-free pension savings will be held constant at £1.8 million and £255,000 respectively, for five years. Previously, it had been expected that they would go up in line with inflation.

Andrew Roberts Partner at Barnett Waddingham, the consultant, said: “This freezing of the allowance at £1.8m for a total of six years will put off high net worth pension savers from investing in potentially high returning assets, which, in this depressed market, means equities and properties.”

Will there be any help for my mortgage?

The government has secured a commitment from lenders the they won’t repossess homes within three months of the owner going into arrears.

The government is also establishing a lending panel to monitor whether banks pass on government support through better rates for households and small businesses.

The government is also considering guaranteeing new mortgages following Sir James Crosby’s report on housing finance.

“Ultimately, this move should increase funding available for new borrowers which, in turn, could inject some much-needed activity back into the housing markets,” said the Royal Institution of Chartered Surveyors.

Did the government back track on car tax?

In part, yes. At the moment there are seven bands ranging from A-G. Cars in the A have no duty charge rising to £400 in the top band - unless they were bought before March 23, 2006.

From next April, however, the government had said it would have 13 new bands ranging from A-M. The most polluting vehicles would have a rate of £440. By 2010, the rate would increase to £ 455. The new tax regime would affect all cars registered after March 1, 2001.

It would also see the introduction of a one-off "showroom" tax for new cars by 2010. This would range from £115 to £950 for the most polluting vehicles.

However, the government announced that to reduce pressures on motorists during the current economic downturn there will be no significant rate changes until 2010, and no driver in any given band will pay more than £30 more in that year.

Cars bought after 2001 but before 2006 were also given a reprieve.

What about flights?

One of the big surprises was a huge increase in air passenger duty on long-haul flights. From April 2009 there will be four new bands depending on the distance you fly, with rates going up from a maximum of £80 today to £170 for the highest band in 2011.