But they will become less attractive in 2004 when dividends earned on

But they will become less attractive in 2004 when dividends earned on shares held within an Isa cease to earn tax relief. There is also no certainty about their long-term future because Mr Brown has guaranteed their existence only until 2006.John Whiting, tax partner at PricewaterhouseCoopers and president of the Chartered Institute of Taxation, believes there will be extra benefits for Isa buyers, but not until next year He said: “This was one Budget too soon. With some of the tax incentives running out in 2004 we will hear next year about the future of Isas.”But the lack of incentives in this Budget are unlikely to encourage Christopher and Emma Bryan, from Tooting in South London, to save more. At present, their only substantial investment is their £200,000 mortgage. Mr Bryan, 33, is an accounts manager at a greeting cards company, and contributes £2,000 into a pension and his wife, who is a full-time mother to their two young children, does not have a pension.The couple did not feel they could up their savings, especially as the increase in NICs will cost them £254 a year, on Mr Bryan’s £30,000 salary. Mrs Bryan, 27, does not feel the money will improve the National Health Service. She said: “The extra funds will be swallowed up in bureaucracy.

I would rather go private and not pay the extra contribution.”The Chancellor made modest pension changes, raising the earnings cap on contributions in line with inflation to £97,200 and he reconfirmed his commitment to reform of annuities, with suggested changes to free the rules expected in weeks.But there was disappointment that more radical measures were not taken to increase pension savings. Guy Smith, business tax partner at the accountant Moore Stephens, said: “I am very surprised there was nothing on pensions to offset the impact of the increase in national insurance. Now, higher-rate tax- payers will effectively pay 41 per cent tax, but their pension tax relief – which had been the same as income tax – remains at only 40 per cent.”Mr Brown said he is pleased with the take-up of stakeholder pensions, the low-cost products introduced a year ago as a way of extending personal pensions to the lower paid. But the pensions industry acknowledges that the numbers of stakeholders sold have been disappointing and expect that a future Budget will have to tackle this problem by making contributions by staff and employers compulsory.One group whose pension arrangements may benefit from the Budget are high earners with large bonuses, or the self-employed, because increasing NICs will be an incentive to take more earnings or bonuses as pension contributions, which do not incur NICs, rather than as income, which does. Roderic Rennison, financial services director of Bradford & Bingley, said: “There will certainly be more emphasis on tax planning to find legitimate ways to avoid NICs, and this could include pouring more into pensions or taking income as dividends.”The Bryans, whose children Jack and Thomas are eight months and two years, get the new child tax credit from 2003, which will be worth £26.50 for their first child and slightly less for their second son.Finally, pensioners on low incomes will also benefit from the combination of the minimum income guarantee, which has already come into force, and the new pension credit, available from October.The Treasury promised the poorest pensioners would be £1,500 a year better off.

But critics say pensioners with modest savings will be penalised because their efforts might eject them from the group qualifying for MIG while not being wealthy enough to benefit from the new credit, which will reduce tax on pensioners’ savings.Mr Brown’s credits may be ingenious but they may be too complex. Already, say the Liberal Democrats, one in three people do not claim credits available to them.. Jane Galloway, a part-time careers service adviser and single mother, gained in the Budget from family-friendly tax credits but that advantage is cancelled out by increased national insurance payments. Moneynet Jane Galloway, a part-time careers service adviser and single mother, gained in the Budget from family-friendly tax credits but that advantage is cancelled out by increased national insurance payments.By next April she will be paying approximately £180 more in national insurance, but considers this a reasonable price to pay for improvements to the NHS. On the plus side, she gets £90 more in children’s tax credit, replaced by the more generous child tax credit next April.Her personal tax-free allowance has increased by £80 to £4,615. But to offset this she will have to pay the lower rate of 10 per cent income tax on her first £1,920 of earnings, a rise of £40.With an income of about £20,000 and a daughter about to start secondary school, Ms Galloway, 34, was pleased to see tax credits for those on low incomes, a rise in national insurance and a pledge by Gordon Brown to audit spending on the NHS.She said: “Every year people watch the Budget and consider it some sort of personal lottery, which it seldom is. I think by concentrating on national insurance and the NHS Gordon Brown will help people focus on the bigger picture.”Having seen scores of friends in the childcare sector forced out of work after the introduction of the minimum wage, she particularly appreciated tax credits for single people and couples on low incomes.

Putting altruism to one side, Ms Galloway considered the Budget provided mixed news for her own finances, and some difficult sums.Her personal tax-free allowance has increased by £80 to £4615. There will also be an increase in the working families’ tax credit. The limit for this has been raised to £58,000 for couples and extended to single people.Her daughter is looked after by a registered child minder, but as she is 11 and about to start secondary school, changes in childcare allowances have come too late. Ms Galloway paid about £50,000 for their two-bedroom house in Derby four years ago and has a small mortgage.She has a Peugeot 406 and was pleased there has been no increase in road tax and fuel duty, although she fully expects higher prices at the pumps sooner or later. As a committed environmentalist she has a moral dilemma over fuel duties She does not drink or smoke.. If the tax avoidance industry was not celebrating well into the early hours of Thursday, they should have been.