Income tax

One of the most significant changes is the adjustment to income tax bands. As part of a drive to simplify the system, the 10 per cent band will be scrapped from April 6, and the basic rate of tax will drop from 22 per cent to 20 per cent. The 40 per cent higher rate of taxation kicks in on income above £41,435.

National insurance

There will also be changes to the amount of national insurance (NI) that higher-rate taxpayers pay. The upper earnings limit, up to which you pay the standard rate of 11 per cent, is being increased from £670 a week to £770 (£40,040 a year). Any earnings above the limit are then taxed at 1 per cent. The move, designed to align the NI upper earnings limit more closely with the higher-rate income tax threshold, will hit middle and higher earners because they will pay 11 per cent on weekly earnings between £670 and £770, rather than the 1 per cent that applied previously on earnings above £670.

Allowances

For people of working age, the personal allowance of untaxed income will increase to £ 5,435. There will be a larger increase in the personal tax allowance for the over-65s to compensate for the abolition of the 10 per cent income tax band. For those aged 65 to 74, it will increase by 20 per cent, from £7,550 to £9,030. For those aged 75-plus, it will increase from £7,690 to £9,180.

Pensions

At the moment, the Government gives tax relief of 22 per cent on your pension contributions if you are a basic-rate taxpayer and 40 per cent if you are a higher-rate taxpayer, effectively refunding the income tax that you have paid on the amount contributed to your pension. For basic-rate taxpayers, this means that a £10,000 pension contribution is topped up to £12,820. In the next tax year, however, the contributions will be topped up by only 20 per cent, to £12,500.

If you are contemplating investing a lump sum in your pension, there is a pressing need to do so before the end of the tax year.

Capital gains tax (CGT)

The top rate of 40 per cent is being replaced by a flat rate of 18 per cent. But this good news is balanced by the abolition of two tax reliefs: indexation relief and taper relief. Indexation relief reduces an investor's gain by the annual rate of inflation for years between 1982 and 1998. Taper relief, which started in 1998, cuts the percentage of the gain that is taxable, depending on the type of investment and the length of time it is held.

For non-business assets, such as shares, funds and property held by private investors, taper relief reduces progressively a higher-rate taxpayer's effective tax rate from 40 per cent to 24 per cent over ten years (20 per cent to 12 per cent for basic-rate taxpayers). For business assets, such as companies built up by individual entrepreneurs and company shares held by employees of that company, the effective CGT rate is reduced to 10 per cent after only two years (5 per cent for basic-rate taxpayers).

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

Savings

The annual Isa limit will be raised from £7,000 to £7,200. The distinction between maxi and mini-Isas will be abolished, to be replaced by cash Isas and stocks-and-shares Isas. Anything up to the full £7,200 can be invested in a stocks-and-shares Isa, while the maximum that can be invested in a cash Isa is Pounds 3,600.

Personal equity plans (Peps), the forerunner to Isas, will be brought under the Isa umbrella and investors with cash Isas will be able to transfer them into stocks-and-shares Isas. However, savers with stocks-and-shares Isas will not be able to switch the other way.

Non-domiciled residents

At the moment, non-UK residents who are working in this country pay tax here on their earnings in this country but not on any of their non-UK income. From Saturday, non-doms who have lived in the UK for more than seven years will be taxed on their worldwide earnings, rather than just those in this country, or have to pay an annual charge of £30,000.