Martin Lewis: Four urgent ways you may be due £1,000s in tax back – if you're married, had a PPI payout, wear a work uniform or even just pay tax
If you're married or in a civil partnership, have had a PPI payout, wear a uniform to work or pay any income tax, you could be due £100s or even £1,000s in tax back – but you'll need to check urgently, as the crucial 5 April tax year deadline is approaching. That was the key message from MoneySavingExpert founder Martin Lewis in the latest episode of ITV's The Martin Lewis Money Show Live.
The video clip and the transcript are below. Also see our Marriage tax guide, Martin's PPI tax blog, our Uniform tax guide and our Tax Code Calculator.
ITV's The Martin Lewis Money Show Live – Tuesday 21 March
From The Martin Lewis Money Show on Tuesday 21 March, courtesy of ITV. All rights reserved. Watch the full episode on ITVX.
Transcript of what Martin said on the show…
Here's a direct transcript of what Martin said, though we've broken it up into sections for ease.
The crucial 'you can only claim back four years' rule
"Your last chance to claim these things back is the 5 April this year, but I would get on with all of these. So you've got that in your head. That's the year, that is the reason for doing everything I'm talking about. Let's start with the first one.
2.1 million couples are missing out on a tax perk worth £100s
"The marriage tax allowance. There are up to 2.1 million eligible couples who are not claiming this tax perk.
"To get it, you must be a non-taxpayer married to a basic 20% taxpayer and civil partners are included. So who here is married or in a civil partnership? Hands up. Anyone just cohabiting, living with someone but not married? 'Living in sin' they used to call it. You guys can't get this. This is social engineering through the tax system.
"Now, a non-taxpayer is literally somebody who does not pay income tax in the year. Don't worry about, 'What if I volunteer?' If you don't pay income tax, you're a non-taxpayer.
"What you do is: the non-taxpayer uses Gov.uk to transfer 10% of their tax-free allowance. I have an animation. It's very exciting. Let me show you. Here we go. Bring it up.
"So there you go. There's our non-taxpayer and our taxpayer. They both get the same £12,570 a year they can earn before they pay tax on it.
"But the non-taxpayer can take 10% of that. There we go, which is £1,260, and give it to the taxpayer.
"So look, their [the non-taxpayer's] allowance has gone down, but they're not using it anyway.
"Their [the taxpayer's] allowance is now £1,260 more. So that's £1,260 they're not paying tax on that they would have done. 20% of that is £252. So that's £252 in your pocket.
"So, let's go back to why this is 'now'. If you're eligible, you can claim back four years. That means if you were eligible, you would get £1,242. But you need to do it now, or you lose the £238 from 2018/19.
"If you did it in April, you'd feel like you've got the same amount of money, but that's because you'd be getting next year's allowance as well. Well, you'll still get that if you claim now because once claimed, unless you're not eligible anymore, when you get in touch with them, you will keep getting it.
"The current year money is paid by a tax code change. But it may be a little late to do that. So they might give you a backdated payment, and the backdated ones, you actually get the money into your bank account or a cheque. We are talking serious cash here.
"Now, this is a winner for almost everyone. There's one tiny quirk, that if the non-taxpayer is only a little bit below the threshold and the taxpayer is a tiny bit above the threshold, it can be negative for you. But in almost every other case, it works.
"Is there anyone here who's claiming the marriage tax allowance? Hands up. I will ask this gentleman here. Is it easy to do? How much did you get? Yeah. Well, the whole amount £1,200. You got the £1,000. Lots of you got the £1,000.
"I'll check the other way. Is there anyone in here who's just seen that and thinks, 'We should be doing it'? Let's see. Yes. There's a couple there. And there's a few over there. And I'm sure there's some of you at home. Marriage tax allowance. It's really easy to do. Absolute must. Non-taxpayer married to the basic 20% taxpayer. Remember, it's the non-taxpayer who has to apply, though, not the taxpayer."
Angellica Bell (Martin's co-presenter): "Yeah. And we've got an email here as well. Sheila did the same and got £1,000."
Martin: "Oh, perfect. Right. But let's move on. Well worth doing."
If you've had a PPI payout, you're likely due tax back
"Number two. PPI. You know what 'PPI' is, don't you? It's what happens when you change a baby boy's nappy. Now, go with me, you'll get there in a moment.
"So, if you've had a PPI payout, you're likely due tax back. And it's worth noting the deadline to claim PPI through the ombudsman was August 2019.
"So that 2018/19 tax year, a lot of people were claiming because it was highly publicised by me, amongst others. Now when you get a PPI reclaim, you are paid back what you paid in, plus an added (this is the crucial bit) 8% statutory interest. Now that interest counts as savings interest for tax purposes. But unlike normal savings, with PPI, they took 20% tax off automatically.
"Yet most people – and hopefully you know this – don't pay tax on savings, because as a basic-rate taxpayer you can earn £1,000 a year of interest without paying tax on savings. As a higher 40% rate taxpayer, you can earn £500 of interest without paying tax on savings. And interest rates were pants back then, so you weren't getting much anyway.
"So if you're in that category, some or all of the payment should have been tax-free. Now, it's the tax year you got the payment in that counts. Everybody who's had a PPI payment, check – especially if your payment may have been 2018/19. If it was before that, you're too late I'm afraid, you can't do it.
"You fill in the R40 form via Gov.uk to get the tax back. It is complicated to do, but you'll find there's free step-by-step help elsewhere on the internet, guides available that will talk you through how to do it. I think you've got a success, haven't you?"
Angellica: "I do, while you're on the subject. This is from Edward. And he said: 'You said on the show that you can claim your PPI for a tax refund. So I filled in an R40 form, I sent it off to HMRC, and within about six months I received my cheque for the sum of £2,616.50! To Martin and the team, thank you for your help.'"
Martin: "So my guess on that would be, to get that much, they were probably a non-taxpayer, when of course you have a much bigger amount that you can have tax-free if you weren't paying tax on the interest. But for many people these are big sums. Don't ignore it. Shall I go to my next ones?"
Angellica: "Next one, please."
Wear a uniform to work? You may be able to claim a tax rebate
Martin: "Well, these are a couple of quickies now. First one, do you wear a uniform to work? Don't worry, I'm not chatting you up. You may be able to claim a tax rebate if you wash or repair your work uniform yourself, even if it's just a branded T-shirt.
"The minimum allowance is £60 a year. So, that's a £12 a year gain. It's not huge at the basic rate. It's double that at the higher rate. Don't pay anyone to reclaim this. It's really easy to do it yourself. I bet we've got one of those."
Angellica: "Yeah, we have."
Martin: "Success me up."
Angellica: "So many successes coming in today. This is from Grant. He says: 'I'm an electrical technician. None of my colleagues knew about the uniform tax, so I told them all about it. In total, around 40 of us got it back. A company saving of around £14,500.'"
Martin: "Wow! That seems very high. I'm fascinated to know what category of uniform they were in in order to get that, because those are the type of things that fascinate me. But I think I'll find out later."
Urgently check if your tax code is correct – it's your responsibility, not HMRC's or your employer's
"Right. Let me do my last one. Tax codes. Urgently check if yours is correct. Your tax code is a number that tells your employer or your pension provider what tax to deduct from your income.
"There's one. Here we go. This is the most common one: 1257L. Now, the way to work this out is, you add a zero to the end. So that becomes 12,570, which is your tax-free allowance. As for the L, that's really complicated. I think from memory, before I started doing this, that means lower. My uncle, Tax Tony, he's a just retiring tax accountant. Is that right? That used to mean lower?"
Martin's uncle Tony: "It was for unmarried people who got a lower increase in their allowance each year. H was for married people who had a wife's earned income, additional allowance."
Martin: "You can see it runs in the family, can't you? OK, so you need to check yours. Millions of them are wrong and it is your responsibility. It is not HMRC's responsibility. It is not your employer's responsibility. It is your responsibility to check it's right.
"Now, if it's wrong and you underpay, they'll come and they'll want the money. And that is a nightmare for people.
"But if it's wrong and you overpaid, then you're due the money back. But that deadline for 2018/19 is coming fast. This could be big money. And I know you've got a success on this one."
Angellica: "David's got in touch about tax codes, Martin. He said: 'I want to thank you for reminding us to check our income tax codes. As it turns out, my wife has been on the wrong code for four years and she's just received a refund cheque of £2,585.'"
Martin: "Again: it's big. And I tell you something, with all these tax ones, people are always surprised at the scale of the refunds that they get. This is huge money and it's lovely to have Uncle Tony in the audience. It's the first time he's come to see me. It's very nice."
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