THE cost of living crisis is set to hit us all in the pocket from April.
HANNAH SMITH shares eight simple tax breaks that you could be missing out on that could save you cash.
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Marriage allowance
IF your other half is a lower earner, you could pocket £252 a year with the marriage allowance.
If you are married or in civil partnership then you can share ten per cent of your partner’s personal tax allowance (the amount they earn without paying tax) to cut your bill.
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You must be a basic-rate taxpayer and your partner must earn less than £12,750 a year.
You need to apply online to HMRC to get it, but once set up it runs automatically each year.
“It’s possible to backdate a claim to April 2017, so you could claim for up to five tax years,” explains Lisa Tipton, of the New World Financial Group.
HOW MUCH? £1,200-plus over five years.
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Tax-free childcare
CHILDCARE costs a fortune, but you could get help towards it with tax-free childcare.
You could claim if you’ve got an under-11 living with you, and you and your partner both work.
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If one of you is ill, disabled or on leave, you may still qualify – but not if you already claim benefits such as Universal Credit.
For every £8 you pay in, the government chips in £2, and you can claim up to £2,000 each year per child, or up to £4,000 if your child has a disability.
To grab the cash, set up an account through the government’s website and use it to pay your nursery or childminder, who must be signed up to the scheme.
HOW MUCH? £2,000 per child, each year.
WFH allowance
IF you often work from home, including because of Covid, you can claim £6 a week tax-free to help cover the cost of utilities such as heating, electricity and broadband.
A basic-rate taxpayer gets £62.40 a year with this allowance. Claims can also be backdated for a year, so you could get up to £125.
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You can apply for it on the government website, but be quick: “This benefit is likely to end soon due to a rise in costs due to the number of claims,” warns Lisa Tipton from New World Financial Group.
You have until April 5 to claim the allowance. Last year 800,000 employees working from home claimed the tax back.
HOW MUCH? Up to £125
Rent out your driveway
YOU can earn up to £1,000 tax free if you get an income from property, such as renting out your driveway or letting your home on Airbnb while you’re on holiday.
If you don’t own your home then you need to check with your landlord that they are happy for you to do it.
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You will also need to check with your home insurer. You can’t use this allowance if you’re letting out a room in your own home.
As a basic-rate taxpayer, this allowance could save you £200 a year, and you don’t need to tell HMRC. Be sure to vet your prospective tenants carefully.
HOW MUCH? £200
Sell, sell, sell
IF you’ve got a talent, for example, baking cakes or embroidery, then you could set up an eBay business at home.
You can earn £1,000 a year tax free with the trading allowance.
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You could save £200 a year if you’re a basic-rate taxpayer, and you don’t need to tell the taxman what you’ve earned.
Websites such as Etsy also allow home crafters to sell their wares online without the hassle of you having to set up a website.
HOW MUCH? £200
Council tax discount
IF you are retired, on a low-income or single, you can get a discount on your Council Tax bill.
How much of a discount you receive depends on your household income, whether you have children and if you receive any benefits.
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If you are living alone then you can get 25 per cent off. iImply apply via the gov.uk website.
Council Tax bills are set to go up by an average of five per cent in April.
You can check with your local authority to find out exactly how much of a rise to expect.
HOW MUCH? Up to 100 per cent off your bill
Pension allowance
PENSIONS generally give you good tax breaks – for every 80p you put in, the government puts in 20p (if you’re a basic-rate taxpayer), and you can pay in up to £40,000 a year with the pension allowance.
But if you do not pay tax because you don’t work, or you earn less than £3,600 a year, you can still get a pension tax boost.
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If you pay in £2,880 to a pension, the government tops it up by 25 per cent to make £3,600.
If you can’t afford a lump sum, you can still get this freebie by paying in £240 a month for a year. This would give you a free £720, explains Adam Rutter, from WPS Advisory.
If you are already retired, you can withdraw £3,600 a year without paying tax on it, as long as your income is below £12,570, so again that’s a free £720.
HOW MUCH? £720
Rent a room
IF you’ve got a spare room in your home, you could make extra tax-free cash by taking in a lodger.
You can do this even if you are renting, as long as you get your landlord’s permission.
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If you are a homeowner, you need to get your home insurer and mortgage lender to agree.
If your lodger pays you £7,500 or less a year, you don’t have to pay income tax on it.
That means a basic-rate taxpayer would save £1,500 in tax on income of £7,500 a year.
To qualify, you must also be living in the property, and the room must be furnished.
The allowance is halved if you share the income with a partner or someone else you live with.
HOW MUCH? £1,500
Are you one of a million missing out?
By Lynsey Barber
NEARLY one million pensioners are missing out on cash that could boost their income by thousands of pounds a year, new government data shows.
Pension Credit is a benefit that can top up state pension payments for those on the lowest incomes.
It can also unlock access to a range of other perks including a free TV Licence for the over-75s, council tax bill discounts and help with your heating costs.
There are thought to be 850,000 retirees missing out on £1.7billion between them. That’s an average of £1,900 a year each, but the most in need can claim as much as £3,000.
There are two parts to the benefit, and pensioners can be eligible for one or both parts.
Guarantee credit tops up your weekly income to a guaranteed minimum level.
Savings credit provides extra money if you’ve saved money towards retirement.
You may get extra amounts if you have other responsibilities and costs – for instance if you have an illness or disability, or are caring for someone else who does.
Claiming pension credit can also give access to Housing Benefit and around a quarter of a million pensioners could be missing out on this cash, which could boost their income by £4,000 a year.
Stephen Lowe, a director at Just Group, said: “Hundreds of thousands of people who are struggling to make ends meet may not realise financial help is available or how to claim it.
“Pensioners are facing a steep increase in inflation which could rise to over seven per cent this year according to the Bank of England – that would outstrip this year’s State Pension increase of 3.1 per cent in April.
“As the cost-of-living crisis starts to bite, and with pensioners heavily impacted by rocketing energy bills, it is more important than ever that anyone struggling for income checks the benefits available to them and how they can claim.”
Some are missing out because they think they will not get it if they own their own home or have savings, but that is not always the case.
You can check if you’re eligible by using a benefits calculator like the one from www.entitledto.co.uk or speak to your local Citizen’s Advice.
To apply online go to www.gov.uk/pension-credit or call the Pension Credit claim line on 0800 99 1234.
