TAXPAYERS could save themselves hundreds of pounds each year with these five easy tips.
Sarah Coles, senior personal finance analyst at Hargraves Lansdown, has offered guidance on how households can save cash as the cost of living crisis continues to bite.
1
Whether it be claiming the marriage allowance, or checking your council tax rate, here are some easy ways for making your purse or wallet stretch a bit further:
Claim your marriage allowance
Marriage allowance is 10% of a persons’ personal allowance that can be transferred to their husband, wife or civil partner.
A personal allowance is the amount a person can earn before being taxed by the government – the maximum this tax year is £12,570.
Therefore, the maximum amount that can be transferred is £252.
And if you claim it successfully, Sarah said it can be backdated for every year you were eligible over the past four tax years.
“It means you could end up £1,242 better off, and get a chunk of the tax you’ve already paid back in your pocket,” she said.
However, there are some rules, and to qualify for the tax break, you need to be married or in a civil partnership – you can’t just be living with your partner.
Most read in Money
One out of the two of you needs to be a non-tax payer, so earning less than £12,570 a year, and the other needs to be a basic rate tax payer.
This means that person will be earning between £12,571 and £50,270 a year.
The person with a personal allowance has to apply for the tax break.
Sarah said: “It sounds complicated, but applying for it is really straightforward.
“Right now, over two million people who could take advantage of this tax break haven’t got round to claiming, so there could be money with your name on it.”
You can apply for marriage allowance on the government’s website.
Claim the working from home allowance
Coronavirus and multiple lockdowns forced many of us to work from home.
And even if you didn’t enjoy the whole experience, there is financial recompense you can get hold of – by applying for the working from home allowance.
Sarah said the rules have now been tightened dramatically, but if you haven’t yet claimed for previous years, there’s time left.
She said: “If your employer forced you to work from home even for a single day during the tax year running 2020/21 and 2021/22, you could claim for the whole year.”
The government set up a specific web page, so you don’t have to carry out a full self-assessment form to claim the money.
You can fill in the form on the government’s website.
One thing to note though, is your employer may have already paid you the allowance.
But, if they haven’t, you can claim tax relief on £6 a week – this is what the government considers is the cost of working from home.
For a basic rate taxpayer, so anyone earning between £12,571 and £50,270 a year, the relief is £1.20 a week.
“It doesn’t sound like a massive sum of cash, but over one year that’s £62.40, and over the two years of lockdowns that’s £124.80,” Sarah said.
“Some people will be able to claim for this year too, but it’s far harder to qualify, because your workplace needs to be unsuitable for you – or too far away.”
Don’t use a claim firm
Sarah said there were a “huge number” of firms and companies offering to claim back tax for you, such as marriage allowance and working from home allowance.
But they will take a cut of any cash you get back or charge a fee.
She urged caution, saying: “They can charge up to 48% of any rebate you get.
“And to make matters worse, they’ll often make you sign a document that means they’ll get a slice of other tax rebates – even if they have nothing to do with that particular claim.”
HM Revenue and Customs is looking at making these firms fairer, but filing a claim yourself is free and usually far simpler than you think, Sarah said.
To make a tax refund claim, you can visit the government’s website.
Check your council tax rate
Council tax has been at the forefront of a lot of households’ minds in recent months.
The government announced millions of properties that were in the A to D tax band would be in line for a £150 rebate in February.
But, Sarah said you might also be entitled to cash on top of this – if your property has been inaccurately valued.
Council tax bands are based on what your house was worth at a particular point in the past.
In England and Scotland it was April 1, 1991, and in Wales April 1, 2003.
Sarah said because all the houses had to be valued at the same time, there was an element of “corner-cutting”, so some valuations weren’t accurate.
You can challenge your valuation, although Sarah added: “It’s worth being aware that challenges can be denied, or can mean the valuation is raised instead of lowered, along with your bill.
“So do a bit of homework before you try it.”
You can check your council tax band here by using the government’s website.
Martin Lewis earlier this year urged households to check their council tax band to see if they were paying too much.
To do this, the first thing is to check what council tax band your neighbours are on – you can then see if it matches yours.
Then you’ll also need to figure out how much your property was worth in 1991, when council tax was launched by the government in England.
MoneySavingExpert has a free calculator tool to help you do this, if you’re stuck.
Check if your employer offers salary sacrifice
This tip may not save you money up front, Sarah said, but can help you in the long-run.
Salary sacrifice is when an employer agrees with an employee to reduce their earnings by an amount which is equal to their pension contributions.
You get pension contributions free of tax, and so while it may leave you with less money to spend in the short-term, it will leave you with a bigger pension for retirement.
Sarah added: “You also need to bear in mind that this will reduce your official salary – and anything linked to it.”
That means if your salary goes below the level at which you pay National Insurance, it could affect your rights to a state pension and even maternity pay.
It can also affect how much you can borrow on your mortgage.
And finally, if your employer offers a payment if you die while working for them, it usually calculates this as a number of times your salary – so this will be lower too.
We pay for your stories!
Do you have a story for The Sun Online Money team?
