How to claim thousands of tax back ahead of national insurance rise
TAXPAYERS are in for an unwelcome surprise next year as Boris Johnson has announced that National Insurance rates will be going up.
Brits will be charged 1.25% more than they were this year to help fund a social care cap.
That means someone earning the average UK salary will have to pay £255 more each year.
If finances are tight, that could be a serious dent in the budget. But there are thousands of tax relief options that could more than make up the difference.
In fact, some options can save you thousands of pounds, and far too many people never get around to claiming.
Here's all the main types of relief, who's eligible and how to claim:
Claim tax relief for working from home - up to £500
More of us are working from home than ever before, thanks to the coronavirus pandemic.
The good news is, if you're told to stay at home for even one day by your employer you can claim for the whole allowance.
It's worth up to £125 each year and you can backdate claims for up to four years.
That means the maximum amount you can claim for comes to £500. Claims for previous years are paid as one lump sum in your salary while ongoing claims for this year will be factored into your monthly wage.
Even better, the government has created a handy online tool to help you get the working from home tax back.
You can find out more about working from home tax relief in our step-by-step guide.
Take advantage of the marriage allowance - worth up to £1,220
The Marriage allowance lets couples that have tied the knot transfer some of their tax-free allowance to a spouse.
Typically, nobody has to pay income tax on the first £12,500 of their earnings.
But if you're married or in a civil partnership, and one partner earns less than £12,570 and the other earns less than £50,270 then you can transfer some of that allowance across.
Essentially, the higher earning person gets some of the unused allowance from their partner, which means a smaller tax bill.
This year, the tax refund is worth £252, but you can also backdate your claim for four years to the tax year starting in April 2017 as long as you were married then.
This allowance has risen slightly over the past few years, so a five-year claim would be worth £1,220.
Claim back overpaid pension tax - worth £3,379 on average
Nearly 10,000 retirees accessing their pension fund overpaid in the first three months of the new tax year from April to June.
They all claimed back £3,379 each on average from HMRC, but your refund could be significantly more or less depending on how much retirement income you took.
Typically, you can take the first 25% of your pension tax-free, and anything over that is taxed at the same rates as earned income.
The exact form you need will depend on how you accessed your cash, but we explain it all here in our guide.
Claiming back uniform tax relief - up to £2,299.50
If you have to wear a uniform for work and you're required to buy it yourself, wash it, replace it or mend it you can claim tax relief.
Once you've claimed once, your tax code should be adjusted for future years so it happens automatically.
You may also be able to claim for other work-related expenses such as tools, vehicles, professional fees, travel and overnight expenses.
We outline the main types of relief and how to claim in our guide.
Get a council tax refund - worth up to £2,225.76
Council tax varies across the country meaning how much you pay is dependent on where you live.
Research from Which? suggest that people living in Nottingham have the highest bills, with a Band D property costing £2,225.76.
Those living in Westminster have the cheapest bills as a Band D property will set you back just £829.87 in council tax bills.
You might also be able to claim money back if your house is in the wrong band.
You need to be cautious as bills can go up as well as down, but if you're successful, the payout could be thousands.
For instance, a Martin Lewis fan got £7,625 back in council tax refunds - find out how to do it here.
Pensions tax relief - worth up to £10,000
When you pay into a pension, the government gives you tax relief on your contributions. In fact, paying into a pension is the most tax-efficient form of saving, according to the Institute of Fiscal Studies.
But if you're a higher or additional rate tax payer, you may only get 20% tax relief added at source and you need to claim the rest yourself.
Rent-a-room relief - save up to £3,375
The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home.
If you're an additional rate tax payer, that means you recoup £3,375 on that you would otherwise have paid in tax.
Charity donation tax relief
Donations to charity from individuals are tax free. You can get tax relief if you donate:
- through Gift Aid
- straight from your wages or pension, through Payroll Giving
If you pay Income Tax above the 20% basic rate, you can claim back the difference between the tax you’ve paid on the donation and what the charity got back when you fill in your Self Assessment tax return.
If you don’t fill in a Self Assessment tax return, to tell them about your charity donations.
If you're owed cash, HMRC will send you a letter, so make sure it has the right address for you.
How much you could get back depends what tax code you were put on, your salary, and how much tax you should have been charged.
READ MORE SUN STORIES
But you could be owed hundreds - or in some cases thousands - of pounds.
You can find out more about tax codes in our helpful guide.
We pay for your stories!
Do you have a story for The Sun Online Money team?
Email us at money@the-sun.co.uk