Today's Pre-Budget Report (PBR) was a story of higher taxes for most of us to help pay for the country's 178 billion of borrowing this year.

Yet among the bad news from Chancellor Alistair Darling (right) came schemes to help homeowners recycle old boilers, an increase in some benefits, and a promise to clamp down on unfair bank charges.

Here's how the PBR will hit (or help) your pocket:

Tax and National insurance (NI) hike

  • NI hike. The Government will increase NI rates by 1 percentage point from April 2011 (currently 11% for most basic rate taxpayers and 1% for most higher rate earners). A 0.5 percentage point rise had already been planned but today's news means even less take-home pay, though the Government says only those earning over 20,000 a year will have to pay the additional increased rate. Someone earning 30,000 a year will be approximately 250 a year worse off.
  • Income tax. Everyone's tax-free personal allowance will be frozen from April next year. In addition, the threshold at which higher rate tax becomes due in 2012 will freeze, which will lead to tax rises (see the PBR: Tax hike for millions MSE News story).
  • VAT. As planned, the temporary reduction in the rate of the sales tax from 17.5% to 15% will end on 31 December, meaning likely price hikes on the high street (see the Beat the VAT hikes MSE News story).

Bank charges pledge

The Government has promised action on banks and building societies that continue to levy 'unfair' overdraft charges if they don't agree voluntarily to make them fairer and more transparent (see the PBR Bank charges action MSE News story and Bank Charges reclaiming guide).

Inheritance Tax (IHT) blow

The planned rise in the IHT threshold has been axed. The tax is currently charged at 40% on assets worth more than 325,000 left behind when people die.

The threshold had been due to increase to 350,000 from April next year, but Darling says raising the allowance is not a "priority". It's estimated the move will raise 100 million.

'Green' plans

The Chancellor plans to introduce a boiler scrappage scheme, similar to the car scrappage scheme, to help 125,000 households replace old appliances. The scheme is due to be launched in early 2010 and will give households with a G-rated (the lowest efficiency level) boiler 400 towards the cost of a new boiler or renewable heat unit (see the PBR: Boiler scheme plans MSE News story).

Other 'green measures' announced include an extra 200 million to helping people make their homes more energy efficient.

The cash includes 150 million to support an additional 75,000 households install insulation and central heating through the Warm Front scheme and 50 million for the boiler scrappage programme.

Property buying tax increase

It had been hoped the Chancellor would extend the current stamp duty holiday on properties costing up to 175,000 beyond the end of this year. But he said the level at which the tax kicks in would revert to 125,000 from the end of December.

Anyone buying a property worth between 125,000 and 250,000 will therefore pay 1% of the value as duty (see the Cheap Mortgage Finding guide).

Mortgage arrears help extended

Many homeowners struggling to pay their mortgage interest will continue to get government support for the next six months. It was revealed the level of interest paid out under the scheme, set by the Government, will remain at 6.08% until 30 June 2010 (see the PBR: Government extends mortgage help MSE News story).

Pensions contributions targeted

Pension contributions made by employers will be included when calculating employees' pay as part of moves to reduce pension tax relief for people with incomes over 150,000.

It is estimated the move will mean a further 70,000 people will see a reduction in contributions the Government makes to their pension, although Westminster says it would introduce a floor so nobody earning less than 130,000 will be affected (see the Pension MoneySaving guide).

Benefits up

The basic state pension will rise by 2.5% in April. Other inflation-linked benefits (such as child and some disability benefits) will rise by 1.5%. These are usually pegged to the Retail Prices Index inflation figure, which is currently negative (see the Benefits Check-up guide).

Financial help plans

A national money guidance service will launch next April. The service will help inform consumers of basic elements of financial products and budgeting. The Government's aim is to help one million people in its first year (see the PBR: Money Guidance launch MSE News story).

Bankers' bonuses curbed

In a one-off measure, UK banks and building societies, and UK subsidiaries of overseas banks, will have to pay a 50% tax on the portion of bonuses to individual staff over 25,000 until at least April 2010. Top earners will also continue to pay the higher tax rate.

Further reading/Key links

Tax rates: 2009/10 Tax Rates
Protect your pocket: Budget Planning