MARTIN Lewis has revealed three urgent tax checks that you need to do NOW.
Martin Lewis’ MoneySavingExpert team issued the warning in this week’s newsletter.
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It included three “must-dos” before the current tax year comes to a close.
The tax year ends on April 5 so there’s just weeks to go, which is why you should think about taking action sooner rather than later, the savings team explained.
Martin said Brits will need to check their tax code, apply for marriage tax allowance if they’re eligible, and claim back PPI tax, all before the date to avoid missing out.
Originally his tips came from a “cost of living special” that ran on the Martin Lewis Money Show, aired a week ago.
Even then, the clock was ticking to make a start on each of the tips though.
Because of a tax rule that means you can only claim back four years, it means you might loose anything you’re waiting to claim from the year 2017/18 if you don’t act quickly enough.
Here’s how Martin said you could avoid it though:
Check your tax code
The money guru revealed that millions of taxpayers’ codes are wrong every year – and it’s YOUR responsibility to make sure it’s correct.
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That means you need to check it to avoid forking out any more than you should be.
Your tax code is a combination of numbers and letters and tells your employer or your pension firm how much tax to take off you.
But the code won’t be checked by your employer or HMRC, so it’s down to you to make sure it’s right.
If it’s not, you could end up paying more than you need to in tax.
You could also be owed money back from the tax office after accidentally overpaying.
Some tax codes changed last year, so it’s a good idea to get clued up on what they mean – otherwise you could be out of pocket.
As the personal allowance (the amount you can earn before paying tax) is £12,570 – most people’s code should be 1257L, but you’ll have to check what yours should be.
You can check your code easily online – HMRC has an online tool or MoneySavingExpert has its own free online tax calculator.
Once you’ve got your code, look on your most recent payslip or P60 to see if it matches up.
If your code is wrong, contact HMRC on 0300 200 3300 and your updated tax code should show on your next pay slip. If it’s right, you don’t need to do anything.
“I would go and do it quickly,” Martin said in his tips, “And I would go back to the 2017/18 tax year to see if you’re owed money.”
Apply for marriage tax allowance
Martin’s second urgent tip is to apply for back-dated marriage tax allowance if you’re eligible – as you’ll get a payout.
It only applies to non-tax payers, usually someone earning less than the £12,570 personal allowance, who are married or in a civil partnership with a 20% rate taxpayer.
It’s a good idea to apply for the allowance if you’re eligible as it means the higher earner pays slightly less tax on their take-home pay through the year.
Martin explained that the non-taxpayer can give 10% of their tax free allowance to the taxpayer in the couple.
And applying before April 5 means you could claim back £230 for the 2017/2018 tax year, he revealed.
If you claim for this tax year and backdate the maximum four years, you could get up to £1,220.
Martin said: “Once you do claim, you needn’t claim again, you’ll get it automatically, but you need to tell HMRC if you’re no longer eligible.”
Claim tax back for a PPI payout
The third and final tip is to claim tax back before the April 5 deadline.
That could be if you had a PPI payout, Martin explained.
He said you should reclaim for the tax year you got the payout in through an R40 form which you can get on the gov.uk website.
“If you got your payout in 2017/18 you’ve got less than a month to get that form in,” he said.
The deadline for making a claim on the mis-sold insurance policies was in August 2019, so you can’t get a tax refund if you haven’t already received a payout.
When the payouts were made, banks refunded the PPI premium plus 8% in interest for each year since you took out the product.
The statutory interest part of your payout is liable to be taxed, and most firms deducted this automatically at the basic 20% rate before you got your money.
But since April 2016, more people have been due some of this tax back thanks to the introduction of the personal savings allowance.
This allows basic rate taxpayers to earn £1,000 a year tax-free interest on their savings, or £500 for higher-rate payers.
You can reclaim the tax on PPI payments going back four tax years, but get it in before the current tax year ends on April 5.
You can make a claim using the online service, or fill in the form on-screen, print it off and post it to HMRC.
Or call the income tax helpline on 0300 200 3300 if you need help submitting your claim.
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