Time is running out for people to claim refunds or allowances from HM Revenue and Customs (HMRC) before the 2021/22 tax year ends on Tuesday, April 5.
As the cost of living crisis deepens and millions of households try to deal with soaring energy bills, it is crucial that you do not miss out on any extra savings or potential boost to your finances.
Martin Lewis, recently shared four key areas everyone needs to check before the financial year ends because you can only claim tax back for a maximum of four years, which means any backdated claims will only be valid going back to the 2017/18 financial year until April 5 - after that date, claims can only be made as far back as the 2018/19 tax period.
Martin’s big four to check include:
- Tax codes
- Marriage Tax Allowance
- PPI tax rebate
- Working from home tax allowance
1. Tax Codes
A tax code is used by an employer or pension provider in order to work out how much Income Tax to take from an individual's pay or pension.
Tax code 1257L will be the most common tax code for the tax year 2021/22 and 2022/23 and is expected to be unchanged until 2026. It replaced tax code 1250L, which was the most popular tax code for the last two tax years (2019/20 and 2020/21).
Martin warned: “Millions of these [tax codes] are wrong every year, but it’s not your employer’s responsibility, it’s not HMRC’s responsibility - it’s your responsibility to check.”
He explained: “If it’s wrong and you’re overpaying then HMRC will owe you money, if it’s wrong and you’re underpaying, you’re going to get a big demand - neither of which are particularly good.”
Martin shared that there are free tools available online to check your tax code and advised people to do it “quickly” and go back to the 2017/18 tax year to see if you are owed any money.
2. Marriage Tax Allowance
More than two million couples have already applied for Marriage Tax Allowance since it launched in 2015.
Martin explained how this is a tax break which allows married couples or those in civil partnerships to share their personal tax allowances if one partner earns an income under their Personal Allowance threshold of £12,570, and the other is a starter, basic or intermediate rate taxpayer.
Eligible couples can transfer 10% of their tax-free allowance to their partner, which is £1,250 for 2021/22, and means they could reduce the tax they pay by up to an impressive £252 a year.
It’s backdatable to 2017/18 and could be worth over £1,000.
3. PPI Tax Rebate
PPI claims may be long gone, but the financial guru explained how many people got a payout that came with 8% statutory interest.
Martin explained: “That extra is taxed as savings and you can reclaim it in the tax year you received the payout.”
To find out how much statutory interest you had added, request a certificate from the firm that paid you back your PPI showing the amount of tax deducted.
To make a claim, fill in the R40 on the GOV.UK website here.
4. Working from Home Tax Allowance
Martin urged everyone who has been asked by their employer to work from home for at least one day during the 2020 lockdown or during the 2021/22 financial year to claim tax relief worth up to £125 from HMRC before April 5 as the rules for claiming working from home tax alliance may change soon.
If you haven’t already claimed for the 2020/21 period, and claim for this financial year it could be worth up to £124.
Check if you’re eligible for the tax break and apply at GOV.UK here.
You can read the full article with Martin’s checklist here.
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