Martin Lewis: Three must-dos by 5 April 1) Tax code rebate 2) Marriage tax allowance 3) PPI tax back
The tax year ends on Tuesday 5 April and MoneySavingExpert.com founder Martin Lewis has an urgent warning. Rules state you can only claim back tax for up to four years, so if you're owed money from the 2017/18 financial year, do it now or you lose the opportunity. Many could be missing out on £1,000s if they don't act now. Martin explained how in the cost of living crisis episode of The Martin Lewis Money Show Live. Below is the key excerpt…
ITV's The Martin Lewis Money Show Live – Tuesday 8 March
This clip has been taken from The Martin Lewis Money Show, which aired on Tuesday 8 March, with the permission of ITV Studios. All rights reserved. You can turn on subtitles by selecting the closed captions icon at the bottom right of the video. You can watch the full episode on the ITV Hub.
Here's a full transcript of Martin's 'big briefing' on the issue
"Now, I have split this into two different sections. The first is the 'you can only claim back four tax years' rule. So what that means is if you're claiming back stuff right now, you can go back to the 2017/18 tax year.
"But 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. So let me go through three big categories here."
'Millions of tax codes are wrong every year'
"First, tax codes. Now, this is the little code – many of you have been sent one for this year; you should check that one too – that tells your employer or your pension firm how much tax to take off you. I mean, currently, it'll be a number like, '1257L' is the standard one.
"Millions of these are wrong every year. And it's not your employer's responsibility. It's not HMRC's [HM Revenue & Customs'] responsibility. It's your responsibility to check. If it's wrong, and you're overpaying, well, then they'll owe you money. If it's wrong, and you're underpaying, well, you're going to get a big demand, neither of which are particularly good.
"Now there are free tools online to check your tax code. I would go and do it quickly. And I would go back to the 2017/18 tax year to see if you're owed money."
Angellica Bell [Martin's co-presenter]: "Darren has emailed; he says: 'Thanks for the tax code tip. I just received a cheque for £475, and they have now changed my tax code. So I can get an extra £1,200 tax allowance a year.'"
Martin: "Yeah, that was probably because I did exactly the same thing last year about the 2016/17 rule on this."
'Marriage tax allowance: Apply now or lose £230'
"Now, marriage tax allowance – the next one, again; you do need to get on with this. This is if you are a non-taxpayer and you are married to a 20% rate taxpayer.
"Right, the non-taxpayer can give 10% of their tax-free allowance to the taxpayer, which means they've got the amount of money that they would have paid tax on, that they aren't now.
"Now the gain for this a year is £252, but this is backdate-able if you were eligible, so you need to do it now or you will lose the £230 from 2017/18. And once you do claim by the way, you needn't claim again – you'll get it automatically, but you need to tell them if you've stopped becoming eligible.
"I should say it's if you're married or in a civil partnership, but I'm afraid you don't get this for cohabiting. This is the state trying to jemmy a bit of social engineering by encouraging marriage or civil partnerships. You've got another success Angellica?"
Angellica: "Yeah, well, on this, Sue emailed: 'Thank you so much Martin, for highlighting the marriage tax allowance. I applied and a week later had a cheque for £960.'"
Martin: "And that is backdate-able four years because your current year is changed by the tax code; the past ones are a cheque or Bacs payment."
'Had a PPI payout? Claim tax back now'
"And then the final one; you'd have thought PPI reclaims were long gone – while they are to an extent (you can't do it anymore through the ombudsman) – many people got payouts and what you get with it, is you get an extra 8% statutory interest, which is designed to put you back in the position you would have been had you not been mis-sold.
"Now, that extra is taxed as savings. But unlike normal savings, which are given to you without any tax taken off, here 20% of it is automatically deducted. Now the vast majority of people don't need to pay tax on savings because basic-rate taxpayers can earn £1,000's worth of interest a year without it being taxed, higher-rate 40% taxpayers, £500 a year without it being taxed. But they take the tax off automatically.
"So if that's you, you reclaim for the tax year you got the payout in via an 'R40 form'. Again, there's free help online because it can be complicated to fill in. But get your skates on because if you got your payout in 2017/18 you've only got a month to get that form in, or less than a month now."
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