Next year’s sweeping changes to income tax rates, national insurance contributions and tax credits will leave some low earners and childless couples out of pocket, but will benefit families and people on higher incomes, according to an analysis of new figures from the Treasury.

Francesca Lagerberg, of Grant Thornton, the accountants that calculated the impact on taxpayers, says: “Many people who heard the Chancellor announce a reduction in the basic rate of income tax in April’s Budget may think they will be substantially better off. But the removal of the 10 per cent tax band and higher national insurance contributions (NICs) will eat away at the benefit.

“You have to look closely at everyone’s individual circumstances to see if he or she is a winner or a loser. The changes are not straightforward.” The key changes are:

An increase in the personal allowance, the threshold under which earnings are tax-free, from £5,225 to £5,435, for everyone under the age of 65. The abolition of the 10 per cent starting rate of tax, currently applied on the first £2,230 of taxable income. A cut in the basic rate of income tax from 22 to 20 per cent. An increase in the starting level of the 40 per cent income tax rate, which will not be revealed until the next Budget. An increase in the upper threshold at which earners will have to pay national insurance at 11 per cent. An increase in the point at which the working tax credit starts to be withdrawn, from £5,220 to £6,420. But once you pass this threshold, the credit will decrease more rapidly. An increase in the child tax credit to a maximum of £2,085 a year – an increase of £240. An analysis of the full effect of the changes by Times Money shows that while some parents and higher-income earners will be better off by about £1,000 a year under the new regime, some childless couples and low-income earners will be penalised.

For example, a family with two children and a combined income of £20,000 a year will be £680 better off, while a childless couple with a combined income of £20,000 will be £203 a year worse off from next April.

Those earning more than £40,000 will face a £500 rise in NICs after the higher national insurance limit increases from £34,840 to £40,040 next April, but this will be offset by a reduction in the basic rate of income tax.

For example, taxpayers who earn £50,000 a year will pay £10,626 income tax from next April, £788 less than this year. However, their NICs will rise from £3,412 to £3,903 – an annual increase of £491. In total they will be £297 better off.

Experts say that much of the extra revenue from the rise in national insurance will go towards the increases in the working tax credit and child benefit. A single-income family on £25,000 a year will receive an extra £723 a year in working tax credits and £60 in child credits.

David Heaton, of Baker Tilly, the accountants, says: “There’s a big redistribution. Higher-income earners are paying more national insurance – the overall increase in revenue is £1.1 billion. This goes a long way toward funding the increase in tax credits.”

But he says that a hidden consequence of the NIC changes is that, for many workers, less of their contribution will go towards their state pension. From 2009, less money will be paid into the second state pension than at present. The exact figures will be released next January.

The Conservative Party has called the move a new stealth tax on retirement and estimates that workers will lose out to the tune of £400 million a year.

Mr Heaton says: “The Government bangs on about the contributory principle to make national insurance more acceptable to the public, but many employees increasingly will be paying 11 per cent NIC at the top end of the range, and that will no longer count for any benefit purposes. “Essentially, what the Government has done is ensure employee national insurance is becoming just more income tax.”

Ultimately, some families at both ends of the income scale will find little difference in their weekly income, despite the barrage of changes.

A family with two working parents and two children on a combined household income of £30,000 will receive an increase of £57 a year, while the same-sized family with a joint income of £80,000 will receive an increase of just £88 a year, or the equivalent of £1.69 a week.

Ms Lagerberg says: “A lot of people will find themselves in a ‘no particular change scenario’. And yet with council tax and household bills increasing, people are going to feel worse off.”

CASE STUDY: It's a family affair

Tabs Singh will be £1,285 better off when the new tax regime comes into effect in April next year. The 31-year-old, who works as a retail communications manager for a mobile phone company, earns just under £40,000.

Mr Singh, who lives in Ipswich with his wife, Satwinda, and four children, aged between 18 months and 7, will receive £1,654 in benefits as a result of the increase in the child tax credit. Next year, he will save £390 on income tax. However, he will pay an extra £87 in national insurance, contributions (NICs) as a result of the increase in the upper earnings limit. And his next pay rise will cost him around £500 a year more in NICs if his yearly salary increases above £40,000 a year.

Mr Singh says, “The more you earn the more you seem to get penalised. The increase in the child tax credit is not particularly encouraging because there are so many irregularities in the system. You hear about overpayments and the Government recalling the funds, which is very worrying.”

He adds: “The overall system doesn’t seem fair to me. I’ve got four children, so I do receive some benefits to compensate for tax and NICs increases. But someone else on my salary who does not get child tax benefits is clearly at a disadvantage.”