The 'hidden' tax that will hit us all: Videos and podcast

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The Tories accused Ministers of "cynical tricks" after it emerged couples would pay 100 a year extra in tax because income tax thresholds have been frozen despite inflation soaring.

The Chancellor made no mention of the move in his 58-minute Budget which swept away stamp duty for most first-time buyers, extended an increase in the winter fuel allowance and included a 2.5bn package for business.

Refusing to offer a pre-election giveaway, Mr Darling insisted Labour was best placed to safeguard the economic recovery and turned the screw on the wealthy by increasing stamp duty on 1m properties and freezing the inheritance tax threshold for four years to pay for care for the elderly.

With the General Election expected to take place on May 6, Mr Darling was able to paint a more positive picture of the economy as he revealed the budget deficit this year will be 11bn less than expected in a highly-political statement in which he said those who had done well in the good years "should now pay their fair share of tax".

Extra income from the one-off tax on bank bonuses and lower unemployment bills meant he could offer some cheer despite debt reaching 743bn.

He pledged a two-year stamp duty holiday for first-time home-buyers on properties up to 250,000, paid for by a new permanent five per cent rate on homes over 1m, although last night it was claimed it would leave a 160m black hole.

A guarantee of a job or training for all 18 to 24-year-olds was extended for 12 months, 20,000 university places were promised and a growth package of measures for business was unveiled There was extra money for families with young children and grandparents who look after the children.

The 3p rise in fuel duty will be staggered to help motorists, but cider drinkers will be hit by a 10 per cent tax increase.

With an eye on the election, Mr Darling established a dividing line with the Tories by announcing the inheritance tax threshold would be frozen at 350,000 for another four years – in contrast to Tory plans to scrap the levy on estates under 1m.

And conscious of concerns in the City, he promised more Government savings, pledged to move 15,000 civil servants out of London over the next five years, promised a crackdown on tax evasion and said he would force state banks to lend more. Yesterday afternoon Whitehall departments also published plans to save 11bn through efficiencies.

Mr Darling made great play of having no new announcements on tax or National Insurance, but that only prompted anger when it later emerged that the threshold at which people start paying income tax would be frozen at 6,475.

The Treasury initially announced the move in December when inflation was near zero – but since then it has risen to 3.7 per cent. Compared to the threshold rising in line with inflation, single people will be 48 a year worse off and couples 96, while workers who earn a pay rise will now find a bigger proportion of their income swallowed up in tax. Thousands of people will also be dragged into the higher rate tax band.

There was added anger when it emerged that hidden in a Treasury document was a 2.2 per cent increase in the minimum wage, piling extra pressure on businesses.

Shadow Chancellor George Osborne said: "The Chancellor said nothing about the biggest tax rise in the Budget. That tells you everything you need to know about Labour's cynical tricks and their priorities."

Adam Waller, Leeds Private Client Services Partner at Deloitte, said: "One of the ways to increase tax that is less headline grabbing is to not increase the scales in which we pay higher rates of tax in line with inflation, so more people fall into those higher rate tax bands."

BUDGET 2010 AT A GLANCE

BORROWING

Borrowing this year to be 167bn – 11bn lower than expected

BUSINESS

2.5bn support for small business

One-year business rate cut from October

BANKS

Basic bank account for a million extra people

RBS and Lloyds to provide 94bn in small business loans

HOUSING

Stamp duty scrapped for homes below 250,000 for first-time buyers

Stamp duty on residential property over 1m to increase to five per cent

TRANSPORT

385m to improve road network, including 100m for pothole repairs

TAX

All income tax bands frozen

Tax allowances for those on 100,000 gradually removed

GOVERNMENT SAVINGS

15,000 civil servants to be relocated outside London

EDUCATION

Funding for 20,000 new university places in science and maths

PENSIONS

Winter fuel allowance rates extended for a year