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The chancellor in his 2012 Budget has proclaimed that almost every working person will gain £220 a year from changes to income tax. But critics dubbed it a budget for millionaires, with pensioners funding a tax cut for the rich. Will you win or lose? Follow our 10-point guide to the highlights and lowlights.

1. Personal Allowances – the £220 gain

The rise in the personal allowance – that bit of your income on which you don’t pay tax – from £8,105 for the coming tax year to £9,205 in 2013-14 takes one million people out of the tax net altogether, and gives the average taxpayer a £220 gain. But the gain shrivels to £33 for poorer families, who lose housing and council tax benefits as a result. Taxpayers in the 40% band gain little – about £15 a year – as the point at which they start paying the higher rate is being reduced (see table).

2. Personal Allowances – the £259 loss

The only bit of the Budget not leaked in advance was a £3.5bn raid on income tax breaks for the over-65s. Anyone over 65 currently has a much higher personal allowance than those in work – £10,500 for 2012-13 compared with £8,105. From April 2013 these will be frozen, and anyone born after 5 April 1938 will no longer be eligible.

Nobody currently in receipt of these allowances will lose them – so if you’re 65 already you’re safe, although their value with wither on the vine. The losers are those approaching retirement. Someone reaching 65 on or after 6 April 2013 will be £259 worse off, as they will receive just the standard allowance, £9,205, not the £10,500 other pensioners received.

The age-related allowance runs out above £25,400, so the losers are those on incomes of between £10,000-£25,000. The government has still not released the figure for what the upper limit will be in 2013-14. Look out for a sneaky tax rise when it is released.

3. One million more higher-rate taxpayers

One of the odder aspects of George Osborne’s chancellorship, is the huge number of middle earners he is pulling into the 40% tax band. To offset the cost of the increased personal allowances, he has decreased the point at which 40% tax begins. As the table shows, the starting point in 2012-2013 will be £42,275, but that will drop to £41,450 in 2013-14. Mike Warburton, of accountant Grant Thornton, calculates that will drag another million people into the 40% band over the next two years. By the time of the next election, around five million people will be higher-rate taxpayers, compared with just over three million when Osborne became chancellor.

4. Tax credits – some lose £1,000

Take the situation of a family with one child, where the father works full time and the mother part-time in a shop. The father loses his job and can’t find another. The mother can’t get the shop to extend her hours. They could lose as much as £1,000 in income, as from 6 April this year working tax credit will be withdrawn for those who work fewer than 24 hours a week. They do, however, keep child tax credit.

On a more general level, if you work at least 30 hours a week, have one child and your annual income is above £26,000, you’ll also lose out on child tax credits worth £545 a year.

5. 50% tax axed – millionaire gains £42,500

The “additional” 50% tax rate will be cut to 45% from April 2013, although there was no announcement about if and when it will fall back to 40%.

For someone on £1m a year, the tax cut is worth £42,500 next year. For someone on £500,000, the cut is worth £17,500.

The chancellor said the tax was bringing in far less than anticipated, and that there is just a £100m loss to HMRC by cutting it to 45% – although his figures are hotly disputed. Accountants said that most high earners, who were warned in 2009 of the impending rise in 2010, arranged their financial affairs to minimise the short-term impact.

6. Stamp duty – £40,000 extra on a £2m home

Whether you’re super-rich and looking for your next palatial pad, or a hard-pressed prospective first-time buyer trying to get a foot on the property ladder, the news on stamp duty wasn’t good.

The chancellor whacked up stamp duty on homes costing £2m or more to 7% – which equates to a £140,000 tax bill on a £2m house, and a rise in the bill on a £5m house from £250,000 to £350,000.

Wealthy individuals who buy £2m-plus properties through companies to avoid tax will be hit with a punishing 15% charge, and those who have already done this look set to face a “large” annual charge from next year.

When it came to us mere mortals, there was disappointment that the two-year stamp duty holiday for first-time buyers, which ends today, wasn’t extended. Since March 2010, first-time buyers have been exempt from the 1% duty on properties between £125,000 and £250,000 – a tax break worth up to £2,500.

7. Cigarettes – £135 extra a year for someone on 20 a day

Do you smoke 20 a day? If so, you’ll be coughing up (ahem) an extra £135 a year after the chancellor added 37p to the cost of a packet. The average price for 20 cancer sticks is now £7.46. Announcing a duty increase of five percentage points above inflation for all tobacco products, Osborne said there was clear evidence that increasing the cost of tobacco encourages smokers to quit and discourages young people from taking up the habit.

8. Booze – 3p on a pint, 11p on wine

Duty rates for all alcoholic drinks will rise by two percentage points above inflation, adding 3p to the price of a pint of beer, 2p to a litre of cider, 11p to a bottle of wine, and 41p to a bottle of spirits, according to the government. If that’s enough to drive you to drink, get down to the supermarket this weekend, because the new rates take effect from Monday. Commentators said the change would lift the average price of a pint and a bottle of wine to £3.17 and £5 respectively.

9. Child benefit – middle-class winners

The chancellor provoked uproar last year when he announced plans to withdraw child benefit from any household with a higher-rate taxpayer. This Budget he relented, introducing a new system where child benefit is only withdrawn on households where someone has an income of above £50,000. At that level, the benefit will be reduced at a rate of 1% for every £100 earned over that threshold.

But the new system threatens bureaucratic chaos for more than half a million taxpayers. HMRC has admitted that 500,000 more people will be forced to complete an annual self-assessment tax form as a result. Child benefit, which is paid directly to be the mother, will still be paid to households on higher incomes, but will be “clawed back” through the tax system if one person’s income starts rising.

Campaign groups say the changes, which come into effect next January, have the potential to repeat the chaos of the tax credits system that saw the government trying to recoup payments made to claimants whose situation had changed.

Patrick Stevens, a tax partner at Ernst & Young, said: “Contrary to the chancellor’s stated aim of simplifying the tax system, this introduces an additional level of complexity to the personal tax system and will increase the number of individuals who will need to complete tax returns.”

10. The hot chicken tax – £1 extra

Those take-away chickens on rotisseries in supermarkets have managed to escape the VAT levy that more conventional take-aways have to levy. But no more.

All hot food taken away for consumption must be charged at 20% VAT, which means a £4.99 chicken will go up to £5.99 if the increase is passed on in full. Other outlets affected include Greggs, whose freshly-baked savoury foods must now carry VAT whether eaten on or off the premises.

Bodybuilding drinks, currently VAT free because of their “nutritional content”, will also become VAT-payable.

Uk and International Credit Card Facts

Did you know…..

The average UK citizen has about five credit cards and an average balance of £9,000.

The average US citizen has about four credit cards and an average balance of $8,000.

The average AUS citizen has about three credit cards and an average balance of $3,000.

• Visa began life as BankAmericard, offered by Bank of America in 1958. It became Visa in 1976.
• Visa logo colours represent the blue of the sky and the gold of the hills in California where Bank of America was founded.
• Visa stands for Visa International Service Association.

• American Express was founded in 1850 and started as an express mail business in Albany, New York
• Mastercard began life as Mastercharge, and was formed by four Californian banks in 1967. It became MasterCard in 1979, and was the first card to use hologram.

• You do not have to sign anything to agree to the cardholder agreement. You are agreeing to this when you first use your card.
• Credit card numbers conform to the Luhn algorithm (Wikipedia for that one!)
• If you have several debts on one card at different interest rates, payments are applied to the balance with the lower interest rate first.
• You can often lower your interest rate with a phone call to your provider, if you suggest you might go elsewhere if they don’t play ball.

• Germany population 82 million has lowest level of credit card use in the continent estimated 4 million credit cards in circu 2009 (euromonitor intl, jan 2010)
• Germany replaced 100,000 credit cards in November 2009 after fears of identity theft (bbc.com)
• German banks, Deutsche Bank and Commerzbank, have each set aside one billion euros (1.46 billion dollars) for credit defaults (dw-world.de)
• In Germany 90 percent of credit cards are charge cards, which means a majority are paid back in full at the end of the month (dw-world.de)

• United Kingdom population 61 million has the highest credit card debt of 14 European nations researched (the straits times)
• There were an estimated 80 million debit cards and 60.7 million credit cards in circu in 2009 (british bankers association, jan 2010)
• Outstanding credit card balances stood at £63.5 billion (that’s billion!!) in November 2009 (british bankers association, jan 2010)

• Switzerland population 7.6 million – 4.2 million credit cards, 7.3 million debit cards (creditcards.com)
• Switzerland’s credit card market has increased 34% in five years (creditcards.com)
• Switzerland is one of 12 countries in the world with lowest amount of credit card fraud and identity theft (creditcards.com)

• Turkey population 74 million – 44 million credit cards in Nov. 2008, up from 34 million in 2007 (creditcards.com)
• $2 billion worth of credit card debt in 2009 (creditcards.com)
• Credit card debt increased 523% from 2002 to 2007 (lafferty.com)

• France population 62 million – estimated 34 million credit card and 78 million debit cards in circu in 2009 (euromonitor intl, jan 2010)
• Very difficult to get credit in France (creditcards.com)
• Credit bureaus report only negative information about consumers. This makes it less useful to lenders and more difficult fraud. (msn.com)
• The average French debit and/or credit card holder pays between 11 and 14 percent interest (pbs.org)

• Australia population 22 million – estimated 36 million debit cards and 16 million credit cards in circu in 2009 (euromonitor intl)
• Australians spent $19.189 billion on credit and charge cards in October 2009 (reserve bank of australia, dec 2009)
• The average credit card account balance was $3,141 in October 2009 (reserve bank of australia, dec 2009)
• Total credit and charge card balances outstanding stood at $45.153 billion in October 2009 (reserve bank of australia,dec 2009)

• USA population 310 million – outstanding natonal credit card balance $775 billion (usa today, dec 2009)
• There were an estimated 488 million debit cards and 686 credit cards in circu in 2008 (euromonitor intl, jan 2010)

• China population over 1.3 billion – estimated 1.8 billion debit cards and 199 million credit cards in circu in 2009 (euromonitor intl, jan 2010)
• Growth in China in the number of credit cards averaged just over 23% from 2004 to 2007, and then surged to nearly 93% in the first half of 2008 (companiesandmarkets.com, dec 2008)

• India population 1.1 billion – estimated 130 million debit cards and 24 million credit cards in circu in 2009 (euromonitor intl, jan 2010)
• Between 2004 and 2007, outstanding credit card debt in India tripled (companiesandmarkets.com dec 2008)

• Russia population 143 million – estimated 119 million debit cards and 8 million credit cards  in circu in 2009 (euromonitor intl, jan 2010)

• Indonesia population 230 million – estimated 39 million debit cards and 10 million credit cards  in circu in 2009 (euromonitor intl, jan 2010)

• Israel population 7.5 million – estimated 160,000 debit cards and 6 million credit cards in circu in 2009 (euromonitor intl, jan 2010)

• Japan population 127 million – estimated 427 million debit cards and 346 million credit cards in circu in 2009 (euromonitor intl, jan 2010)

• Mexico population 112 million – estimated 12 million debit cards and 26 million credit cards in circu in 2009 (euromonitor intl, jan 2010)

• The Philippines population 94 million – estimated 33 million debit cards and 8 million credit cards in circu in 2009 (euromonitor intl, jan 2010)

• Vietnam population 86 million – estimated 15 million debit cards and 2 million credit cards in circu in 2009 (euromonitor intl, jan 2010)

….you do now! Congratulations!

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