Martin Lewis warns of 3 things to check about tax by April or risk losing thousands
Martin Lewis shared three things you must check before 5 April or you risk losing thousands of pounds.
On his ITV show, Martin Lewis Money Saving show, he gave the warning relating to people claiming tax before the end of the current tax year.
What are the three things to do before April?
Martin Lewis explained that you could be eligible to claim money back for the following three reasons:
- You are on the wrong tax code
- You haven’t applied for the marriage tax allowance
- You’ve had a PPI payout
In these examples, you can only reclaim your tax back for the last four tax years, meaning you only have a few weeks left before the 2017/2018 tax back opportunity expires.
After 5 April, 2022, you will only be able to go back as far as the 2018/2019 tax year, as the UK tax year starts on 6 April every year.
On the live show, Martin Lewis said: "In a month's time, on the 6 April, you will only be able to claim back to the 2018/19 tax year, which means if you're due money from then, then if you don't do it now, you're going to lose it.”
Wrong tax codes
Millions of workers are put in the wrong tax code each year and could be owed thousands of pounds each year.
Tax codes are used by your employer or pension provider to work out how much tax is taken from your pay or pension.
The amount you are eligible for depends on the amount you earn and how long you have been in the wrong tax code for.
The most common code for people who have one job or pension is 1275L, although not everyone will be on this.
To check your tax code, you can look on your latest payslip or check your P45. The GOV.UK website offers a webpage to check tax codes but you will need to register for a government gateway ID.
MoneySavingExpert offers a free tax code calculator that can be used to get an estimate of whether yours is correct.
To check your tax code, enter your earnings before tax and your current code. The calculator will then tell whether you are likely on the right code.
A tax calculator will not be able to tell you for definite if you are on the right code but this should give you a rough idea.
If you believe your tax code is wrong, you can contact HMRC and ask them to investigate by calling 0300 200 3300.
But if you find out you’ve been underpaying tax, you would owe HMRC money as the tax would need to be paid back.
Marriage Tax allowance
The marriage tax allowance allows eligible couples to transfer £1,260 of their personal allowance to their spouse or civil partner, cutting their yearly tax bill.
The personal allowance is the amount you earn tax-free each tax year, and if you can claim for all four previous tax years, you could potentially get £1,220 back.
To claim, you will need to be married or in a civil partnership.
One-half needs to be a non-taxpayer while the other person needs to be paying the basic 20% rate of tax.
Meaning one of you doesn’t pay tax or earns less than £12,570, while the other person would earn between £12,571 and £50,270.
Another eligibility is both halves need to be born on or after 6 April, 1935.
MoneySavingExpert estimates around 2.4million couples are missing out on marriage tax allowance.
You can apply online via the HMRC website or by calling 0300 200 3300
PPI was an insurance policy attached to credit agreements such as loans, mortgages or credit cards.
But it was often mis-sold to customers, for example, to people who could never claim, or when people were wrongly told they needed it.
The deadline for claiming back mis-sold PPI through the Ombudsman passed in August 2019, but it could be worth checking if you're owed tax back.
Many banks and lenders automatically deducted tax from PPI payouts, even though not everyone has to pay it.
When the payouts were made, banks refunded the PPI premium plus 8% in statutory interest.
The statutory interest part is taxed as savings, and most firms deducted this automatically.
But since April 2016, people have been due some of this tax back thanks to personal savings allowance.
Personal saving allowance allows basic rate taxpayers to earn £1,000 a year tax-free interest on their savings, or £500 for higher-rate payers.
To reclaim any tax you're due on PPI payouts, you'll need to fill out the R40 form on the Gov.UK website.