The first few months of the year can often be the hardest in lots of ways – it’s cold and dark, the weather is miserable and we are all a little strapped for cash after Christmas. The January pay packet arrives and seems to vanish within seconds. We all look for ways to raise a little extra cash to get through the winter so here’s a surprise – you may actually be able to get the tax man to help ease your financial blues.
Understanding your taxes
According to financial experts, many of us pay more tax than we need to around the UK. There are ways to reduce the amount that we pay that won’t land us in trouble down the line or have any unpleasant repercussions. Top of the list of ways to do this is to make use of the numerous tax allowances on offer from HMRC that many of us miss. Some experts say that there could be millions of pounds each year that could be claimed by people in legitimate ways but that they are unaware of and therefore don’t claim. So here are seven examples that will get you searching for that HMRC contact number to make your claim.
Married couples allowance
If you are married or in a civil partnership, live with your spouse or partner and one of you was born after April 6th, 1935, then you can claim the Married Couples Allowance. This is a little-known tax break that has seen an upturn in numbers of claimants, with some 1.3 million couples easing their financial blues a little with it last year. But there are some 4.2 million couples who could claim so still plenty of us that might save some money. It can save you up to £220 a year and you can backdate it before April to get up to £432.
Anyone with a child under 16 or under 20 and in full-time education is entitled to Child Benefit unless one of you has an annual income of more than £50,009. This payment amounts to £20.70 per week for the oldest child and £13.70 per child for others. Other factors can increase this such as disabilities. Childcare vouchers can also be claimed that subsidises around 20% of the cost of child care.
Uniform tax relief
If your job requires you to wear a uniform that you supply, wash and replace yourself, you can claim a discount on your tax code for this. It isn’t a huge amount of money but a quick called to the HMRC contact number can see you receive anywhere up to £60 for a job you are already doing.
Council tax rebate
Most of us pay our council tax without much thought – or just negative ones, anyway. However, some £3.6 million were claimed back from the government last year by people who challenged their council tax band and received a reduction. You do need to do some research first as it can go the wrong way but if there are grounds for a change in rating, you could save money.
Check your tax code
One of the simplest ways to save money is simply to call that HMRC contact number and check your tax code. If you have changed jobs, been promoted or had a change in status, then this might have been missed and resulted in an incorrect tax code. Of course, it can work both ways but it is often better to deal with the problem now than wait for a huge tax bill down the line. You can also use online calculators to get an idea of how much tax you should be paying and compare this to the actual amounts on your pay slip.
Having a pension
It may be a surprise but having money in a pension is a tax break of sorts and is something you will be thankful for when you hit retirement. Pension funds grow tax-free and any money you add to them also received income tax relief at your highest marginal rate, normally 20% for most of us. You can put a maximum of £3600 a year into one.
The LISA is a savings system designed for those between 18 and 40 and is aimed at encouraging people to save for their retirement and to get onto the property ladder. You can save up to £4000 a year into one and the government will top up the amount by 25% every year until you reach 50. The only downside is that you can’t access the money until you are 60 unless there are exceptional circumstances. So it is ‘save it and forget it’ money that will save you on your taxes and have that lump sum ready when you do retire.