Pictured above: Phil Waller

There will be plenty of tax winners next year despite the Government's cutbacks, according to a Midland expert.

Phil Waller, tax partner at the Birmingham office of accountants and business advisers Mazars, said only high earners were set to lose out.

His comments follow the announcement of income tax rate bands and national insurance contribution rates for the 2011/12 tax year. 

Mr Waller said: "We were all braced for higher tax bills but, apart from high earners, the good news is that your tax bill will not rise next year. 

"In fact surprising though it may sound, those on modest incomes will see a small reduction in the amount deducted from their pay for tax and NIC."

Lower tax and NIC will boost the net pay of someone on average weekly earnings of £500 by about one per cent next year. Those with incomes below average earnings will have a bigger percentage increase in the payment into their bank account - for example with gross annual income of £15,000, net pay will go up by 2.3 per cent or just over £5.50 a week.

Those earning between £40,000 and £100,000 will see their net pay fall - but for most it will be one per cent or less.

Those with salaries above £100,000 will experience a bigger reduction in net pay, though still less than two per cent. For example someone on £150,000 will be £30.80 worse off a week.

Mr Waller said: "Many people will be asking the question - when we were expecting taxes to rise how is it that many will actually find the amount of tax they pay is set to decrease? 

"There are several reasons.

"Although all the rates of national insurance contributions will rise by one per cent, less of your pay will be subject to NIC. NIC will be charged on earnings above £139 a week, compared to £110 a week this year. So for lower earners the benefit of having less income subject to NIC more than compensates them for the employee NIC rate changing from 11 per cent to 12 per cent.

"On the tax front, the annual tax free personal allowance will increase by £1,000. Again this will help people on average earnings, but higher rate taxpayers will not benefit from the increase because next tax year the higher rate threshold is being lowered - so more people will find themselves swept up."

But there is a downside.

"Unfortunately for many, the changes being made to the tax credit rules will have a greater impact on their net income than the tax and NIC changes. Next year many will have lower receipts of working tax credit and child tax credit and some will find they are no longer entitled to any tax credits.

"From April, 2012, child benefit will be clawed back from higher rate taxpayers. And, for some with children, there is another potential ticking tax time bomb. If the Government follow the same pattern at April, 2012, as they have done for this April coming and reduce the higher rate threshold again, you could be a higher rate taxpayer if your gross income is only slightly above £40,000."

Mr Waller said people would need to do their sums to find out if they were a winner or a loser.

And he added: "Whatever your circumstances tax can be frequently be reduced by making sure claims are made for all the reliefs to which you are entitled."