TAXPAYERS could be losing out on thousands of pounds by making three common mistakes – but they’re easy to avoid, if you know how- tax expert.
Not checking your tax code and forgetting to apply for marriage allowance are just some of the errors that millions of people make every year, according to Mitch Young, director at Fusion Consulting Group.
Mitch has decades of experience dishing out accountancy and tax tips, and is part of The Sun’s Squeeze Team panel, here to help you through the cost of living crisis.
Here are three tips by this tax expert that could help you avoid losing thousands of pounds during a time when money is tight.
Forgetting to check your tax code – £100s
Being on the wrong tax code could mean you are paying hundreds of pounds more in tax than you should be.
But it’s down to you to make sure you’re being taxed the right amount.
“HMRC says it is your responsibility not your employers to ensure this is correct,” said Mitch.
To avoid being out of pocket, he recommends doing regular tax code checks.
For example, you might be on the wrong code if you’ve moved jobs, not given your new workplace your P45 or filled in a starter checklist form.
That means you’ll be on an emergency tax code until you contact the tax office.
To check your tax code, look on your payslip – it will be listed near your National Insurance number usually.
You can also use the government’s online tax checker tool to view your tax code.
If it’s wrong, contact HMRC to let it know on 0300 200 3300. If it’s right, you don’t need to do anything.
Not claiming marriage allowance – £1,220
If you’ve tied the knot, you could be missing out on a tax break worth £1,220.
“One mistake is not using your civil partner or spouse’s allowances if they do not pay tax”, Mitch said.
As many as 2.5million couples are not claiming marriage allowance – which is a relief married couples and those in civil partnerships can claim.
Under the help, couples can share their personal tax allowances if one person earns less than the £12,570 threshold.
You can transfer £1,260 over to your partner – reducing their tax by £252.
You can backdate this for the past four years, worth £230, £238, £250 and £250 during the previous tax years respectively.
That totals around £1,220.
Not taking advantage of child benefit loophole – £1,000s
Child benefit is government support dished out to parents to help them look after their children.
It is worth £21.80 a week for the first child – or just over £87 a month – and £14.45 a week – or nearly £58 a month – for an extra child.
But higher earners are slapped with a charge according to this tax expert.
A high income benefit fee comes into force at a rate of 1% of the benefit for every £100 earned over this amount.
“If you or your partner earn above £50,000, you have to start paying it back via tax and register for self assessment or penalties,” Mitch said.
That means if either parent earns £60,000 or more the full amount must be repaid – but to avoid this, you may want to consider adding more to your pension pot.
Upping your pension contributions will lower the income HMRC takes into account.
So if you earned £53,000 a year, but paid £3,001 into your retirement fund, you’d drop back below the threshold and keep all the child benefit.
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