The Budget included an increase in the personal tax allowance - what does this really mean for you? Will you be paying less tax from now on? We explore just how much you can expect to save in your pay packet.
Tax personal allowance
Chancellor George Osborne has delivered some welcome relief to families in the form of an increase in the income tax personal allowance. Don't get too excited though, this won't kick in until 2013 - and not all tax payers will see the same benefit.
Nearly everyone in this country is entitled to an income tax personal allowance. The allowance is the amount of income you can receive each year without having to pay any tax on it.
The personal allowance depends on two things: your age, and your total income (including pensions and interest on your savings).
New tax personal allowance limit
Currently, those under 65 don't have to pay any tax on the first £7,475 they earn. The Government has already announced that the limit will be raised to £8,105 as of April 2012.
In the latest Budget statement, Mr Osborne pledged to set the limit at £9,205 from April 2013. According to figures from the Chancellor, this will see "millions of working people £220 better off every year".
Around 24 million families are expected to see a saving of £220 per year from April 2013 as a result of this change. That means an extra £18 a month in your take-home pay. This figure applies to basic rate tax payers - those who pay a rate of 20%.
If you earn £9,000 per year , you will no longer be required to pay tax at all. Mr Osborne says his ultimate aim is to see the personal allowance raised to £10,000 in the near future.
Higher tax bracket
But Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, offers a note of caution.
While the income tax personal allowance may be set to rise, he points out that from April 2013, the income at which people tip into the 40% tax bracket will come down from £42,475 to £41,450.
Workers who are pushed into the higher rate bracket by these changes may receive around a quarter of the benefit that basic rate taxpayers will enjoy, or even less.
This means that "doctors, nurses, teachers, all those in middle income categories may not be any better off and could be worse off", warns Roy-Chowdhury.
Whether you are better or worse off as a result of the personal tax allowance changes will depend how near to the £42,475 bracket you are currently.
Those firmly in the middle of the 20% tax bracket - ie those earning between £10,000 and £35,000 are likely to benefit the most.
At the same time, Roy-Chowdhury believes cuts to child benefit announced in the Budget will hit the same group of people - families with large mortgages who may slip into the 40% tax band.
Regional pay for civil servants
If you are public sector worker, and if you are based in some parts of the country singled out by the Government for 'responsive' pay rates - you may see your income fall overall anyway, irrespective of any tax changes.
The Chancellor has announced a consultation on regional pay rates. It is thought that in some parts of the country, public sector workers could see an 18% fall in their wages over time.
Civil servants will be the first public sector workers to feel the sting, but the move might eventually affect most state employees, such as teachers, nurses and prison officers.
The plans were formed after research from the Treasury showed that public sector workers not only enjoy far better pensions than those in the private sector, but also receive an average 8% pay premium, with teachers benefiting more than any other profession.
However, the TUC has attacked the plans, saying the knock-on effect will hit local economies by at least £1.7 billion a year.
It could be too early to tell whose income will go up and whose will go down as a result of this Budget when you take into account all the changes - but basic rate tax payers should be sure of at least some saving from April this year, and even more so from 2013.
Other impacts of the Budget 2012: