Cost of Living: Nine money saving tips YOU must do before April price rises



The start of the new tax year is just a few hours away and with households facing a year of eye-watering price rises, it makes sense to get on top of your finances.

The new tax year always starts on April 6 and runs for 12 months, until April 5 the following year.

As the new financial year begins, you’ll notice a whole raft of tax changes and there are some important deadlines you should be aware of.

We explain seven things you must check now – including your tax code, ISA allowance and if you’re entitled to any money back from the man.

It comes as households are being hit with huge increases to their everyday bills, with the big one being the cost of energy.

The energy price cap, which limits how much households can be charged for each unit of gas and electricity, has risen by £693 for those who pay by direct debit.






Here are seven things to check before the new tax year

To ease the pain, the Chancellor will pay homes in AD bands a £150 council tax discount and everyone else will get a £200 energy loan.

National Insurance is also rising from tomorrow, up 1.25 percentage points from 12% to 13%.

1. Check your tax code

Tax codes are used by your employer or pension provider to work out how much tax is taken from your pay or pension.

But millions of workers are put on the wrong tax code each year – and could potentially be owed thousands of pounds.

The most common code for the current tax year is 1257L for people who have one job or pension – although not everyone will be on this.

You can check your latest payslip to see your tax code, or on your P45 if you have recently quit your job.

The Gov.uk website has a dedicated webpage where you can see your tax code as well – to check it online, you will need to register for a government gateway ID.

Have you managed to claim back £1,000s in overpaid tax? Let us know: [email protected]

MoneySavingExpert then has a free tax code calculator that you can use to get a rough idea as to whether yours is correct.

No tax calculator will be able to tell you for definite if you are on the right code – but this should give you a good indication.

If you believe your tax code is wrong, you can contact HMRC and ask them to investigate by calling 0300 200 3300.

You can go back as far as four tax years, so you only have until the end of today to claim for the 2017/2018 tax year.

From tomorrow onwards, you will only be able to go back as far as the 2018/2019 tax year.

If you find out you’ve been underpaying tax, you would owe HMRC money as the tax would need to be paid back.

2. Get £125 from the tax man

Millions of people who have worked from home over the past year have until the end of April 5 to claim £125 worth of tax relief from HMRC.

The ‘work from home’ rebate applies even if you’ve only worked one day from home – and it’s easy to claim online.

The money – which can cover broadband and heating costs – will automatically be returned in your next pay slip with your tax code adjusted accordingly. You don’t need to submit receipts to make a claim.

The rebate is paid based on the rate at which you pay tax.

For example, a worker who pays the 20% basic rate of tax and claims tax relief on £6 a week, would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills.

You can claim £2.40 a week if you pay the higher 40% tax rate.

Over the course of a year, this means workers could reduce the tax they pay by £62.40 or £124.80.

If you miss the deadline, you won’t be locked out completely. HMRC told the Mirror you will have to claim it separately and will receive a lump sum payment instead. If you had to work from home because of the pandemic, you can currently back date it two years.

Find out how to claim the money back, here.

3. Make use of the marriage allowance

Millions of couples may be eligible for a £252 tax break thanks to a little known law that lets you share your allowance with your partner.

It’s known as the marriage allowance and allows anyone with an income of £12,571 or less to transfer up to £1,260 of their Personal Allowance to their husband, wife or civil partner – if their income is higher.

This reduces their tax by up to £252 for the 2021 to 2022 tax year.

Like your tax code, claims can also be backdated four years, so time is ticking to claim back for the 2017/2018 tax year.

If a claim is backdated for all four years, the couple could receive up to £1,220 back.

Find out how to make a claim, here.

4. Top up your Lifetime Isa

The Lifetime Isa is one of the best savings options out there – and you can get you free cash from the government to put towards your first home or retirement.

Through it, you can get up to £1,000 a year in the form of a government bonus up until the age of 50.

If you opened a Lifetime Isa at age 18, that is a maximum government bonus of £33,000 (or £32,000 if you’re unlucky enough to have your birthday on April 6).

The Lifetime Isa can be opened by those aged 18 up to the day before their 40th birthday, and you can save up to £4,000 each year – either in one or more lump sums or as a regular monthly saving.

You can withdraw Lifetime Isa money once you’ve reached age 60 or earlier to buy your first property, but any other withdrawals will involve a penalty – currently 25%.

The deadline to contribute for this tax year is April 5, 2022.

5. Use up your Isa allowance

The 2021-22 tax year Isa allowance is £20,000 – and as usual, all returns are tax-free.

However, before you move your money or open an account, check that an Isa is the best savings type for you.

That’s because Isas are in addition to the Personal Savings Allowance (PSA) which came into effect on April 6, 2016.

If you’re a basic rate taxpayer you can earn up to £1,000 in savings income tax-free. For higher rate taxpayers, this is £500.

In short, this means you can choose a non-Isa savings account and still benefit.

For example, if your current account provider has a savings account with a high rate, you might find it more convenient to pop your cash in there instead. Either way, it’ll be tax-free.

If you’re opting for an Isa, you’ll need to move your money before April 5 to take advantage of the full tax-free year.

6. Claim back cash for work uniform

Millions of hospital workers, shop staff and hairdressers are unaware they could get their expenses back from HMRC if they’ve had to pay for uniform in the past tax year.

It’s simple to claim and the average payout is around £60.

You can find out exactly how much you are owed by following the steps on this online tool – each claim takes around three weeks.

Who can claim it?

You might be able to claim tax relief if:

What can I claim it on?

  • Repairing or replacing small tools needed to do their job (for example, scissors or an electric drill)

  • Cleaning, repairing or replacing specialist clothing (for example, a branded uniform or safety boots)

  • Business mileage (not commuting)

  • Travel and overnight expenses

  • Professional fees and subscriptions

7. Claim back tax on PPI

PPI was an insurance policy attached to credit agreements such as loans, mortgages or credit cards.

But it was often mis-sold to customers – for example, to those who could never claim on it, or in cases where people were wrongly told they needed it.

If you received a payout from mis-sold PPI – the deadline for doing this through the Ombudsman passed in August 2019 – it could be worth checking if you’re owed tax back as well.

Most banks and lenders automatically deducted tax from PPI payouts, even though not everyone has to pay it.

When the payouts were made, banks refunded the PPI premium plus 8% in statutory interest.

The statutory interest part is taxed as savings, and most firms deducted this automatically.

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.

To reclaim any tax you’re due on PPI payouts, you’ll need to fill out the R40 form on the Gov.uk website.

Again, you can go back as far as four tax years with PPI tax claims.

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www.mirror.co.uk

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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