CHANCELLOR GORDON Brown last week confounded expectationsthathisfinalBudget would turn out to be "boring" by unveiling a cut in lower-rate income tax from 22% to 20% - in return for scrapping the 10% starting rate.

Critics slammed his move as a "tax con,notataxcut",claimingthat abolishing the starting rate meant few taxpayerswouldbenefitfromthe2p reduction in the basic level of tax.

However, the Treasury was last week adamant that the overwhelming majority of taxpayers would be better off.

The Budget also gave a small boost for savers, who will be able to place an extra £600 a year place in their cash individualsavingaccount(Isa) schemes, up to £3600, from April 2007. EquityIsainvestorswillseetheir allowances rise to £7200.

Brown'ssurpriseincometax announcement, in the final seconds of his Budget speech on Wednesday, left millions of people trying to work out whether they are gainers or losers.

FromApril2008,the10%rateof income tax will be scrapped, while the current 22% rate will be cut to 20%. At thesametime,the40%ratewillbe raised from its current level of £38,335, the level of earnings at which it begins to be levied, to £43,000.

At the same time, NI contributions, which are currently set at 11% up to an upper earnings limit of £645 a week, or £33,540ayear,willalsorisetothe £43,000 limit in April 2009. In effect, peoplewillbepayingmoreinNI contributions.

Expertsatcharteredaccountants PricewaterhouseCoopers estimate that the abolition in the 10% starting rate and its replacement with a flat rate of 20%meansthatintermsofbasic income tax, a lower earner would not break even in terms of tax paid until he or she earns about £18,000 a year.

Of course, this will be offset by an increased threshold for Working and Child Tax Credit (WTC and CTC) by £1200 to £6420 in April 2008.

A spokesman for the Low Income Tax Reform Group, a lobbying organisation, saysacouple,oneofwhomearns £10,000 a year and the other £5000, will between them pay about £133 more in tax after April 2008, assuming a 3.5% rise in the basic personal allowance. But increases in the way tax credits are paid means that the couple would be about £272 more in WTC, leaving them better off overall.

Assuming they claim, of course: HM Revenue & Customs, which administers bothbenefits,estimatestheuptake ratesforCTCin2004-2005,thelast available dates, were about 82% for CTC and61%forWTC.However,lower-income earners were most likely to claim, reaching up to 90%, with take-up rates among those earning over £50,000 falling as low as 40%. About six million families with 10 million children receive tax credits.

For higher rate taxpayers, the overall outcome is more positive: for those earning £50,000 a year the drop in basic rate tax on the first slice of earnings, coupled by the increase in the level at which 40% starts to bite, means they could be up to £400 a year better off - even after paying more in NI contributions.

Some experts praised the chancellor for simplifying the way income tax is levied. Stephen Herring, tax partner at charteredaccountantsBDOStoy Hayward,says:"The10%startingrate, which he himself introduced in one of his first Budgets, brought additional complexity and confusion into the personal taxation regime which was not justified by its benefit."

Clive Mackintosh, tax partner and head of private clients at PricewaterhouseCoopers, adds: "Fiscal drag, when incomes or values rise at a faster rate than tax bands and allowances, has meant that more people's income has crept into the 40% higher rate tax band over recent years.

"We therefore welcome the increase in the higher rate tax band from £34,600 this year to £43,000."

For pensioners under 75, the tax-free allowance will rise in three stages from £7280 to £9770 in 2011. Over-75s will see their allowance rise from £7420 to £10,000. At the same time, Pensions Credit - a top-up payment that pensioners can expect to receive - will rise to £119.05 for single pensioners and £181.70 for couples.

Meanwhile, for those who drive cars with high rates of CO2 emissions, the chancellor is raising vehicle excise duty (VED) rates for the next three years. Those for the most polluting cars will rise to £300 and then £400.

Inpractice,ownersofaRenault Espace, BMW X5, Range Rover or Jaguar X-Type, all in the top G band, will be among those having to pay an extra £190 a year in VED, from £210 to £300 and then to £400 next year.

Inreturn,Brownhaspledgedto maintain the existing band A zero tax rate. He will also cut the band B rate - which applies to models such as the Toyota Prius, Citroen C2 1.4 diesel and Ford Fiesta 1.4 diesel - from £50 to £35.

Elsewhere, the capital gains exemption will rise from £8800 to £9200. Inheritance tax will rise from £285,000 now to £350,000 in 2010, while child benefit for a first child will rise from £17.45 a week to £20 a week by 2010.

The government has again ignored calls for a reform of stamp duty for homeowners. However, all new zero carbon homes up to £500,000 will be exempt from stamp duty until 2012.