Taxpayers can lose thousands of pounds by making three common mistakes – but it’s easy to avoid if you know how.
Not checking your tax code and forgetting to apply for marriage allowance are just a few The mistakes millions of people make every year, According to Mitch Young, Director of Fusion Consulting Group.
Mitch has decades of experience dismantling accountancy and tax tips, and is part of The Sun Squeeze Team panel, here to help you through a cost of life crisis.
If you’re worried about meeting your needs, struggling to pay off your loans or don’t know how to best manage your cash, get in touch by email. Squeezeteam@thesun.co.uk,
His three tips can help you avoid losing thousands of pounds when money is tight.
Forgetting to check your tax code – £100s
being on the wrong tax code This could mean that you are paying hundreds of pounds more in tax than you should be.
But it is up to you to make sure that you are being taxed for the right amount.
“HMRC says it is your responsibility to make sure your employer is not,” Mitch said.
To avoid getting out of pocket, he recommends doing regular tax code check,
For example, you may be on the wrong code if you’ve transferred a job, haven’t given your P45 to your new workplace, or haven’t filled out the Starter Checklist form.
This means that you will be on an emergency tax code until you contact the tax office.
To check your tax code, look at your payslip — it’ll usually be listed next to your national insurance number.
you can also use Government’s Online Tax Checker Tool To view your tax code.
If this is incorrect, contact HMRC on 0300 200 3300. If it’s correct, you don’t need to do anything.
Not claiming marriage allowance – £1,220
If you tied the knot, you could miss out on a tax break of £1,220.
“One mistake is not using your civil partner’s or spouse’s allowance if they don’t pay taxes,” Mitch said.
2.5 million couples not claiming marriage allowance – Which is a relief, married couples and people with civil partnerships can claim.
under the helpCouples can share their individual tax allowances if one person earns less than the £12,570 limit.
You can transfer £1,260 to your partner – reducing their tax by up to £252.
you can Backdate it to the last four yearsWorth £230, £238, £250 and £250 respectively during the previous tax years.
This total is around £1,220.
Not taking advantage of the child benefit loophole – £1,000s
Child benefit is government assistance given to parents to help them care for their children.
This is worth £21.80 per week for the first child – or just over £87 a month – and £14.45 a week – or about £58 a month – for an additional child.
But those who earn more are charged.
For every £100 earned on this amount, a high income profit fee applies, at the rate of 1% of profit.
“If you or your partner earns more than £50,000, you have to start paying it back through tax and register for a self-assessment or penalty,” Mitch said.
This means that if either parent earns £60,000 or more the full amount must be paid – but to avoid this, you may wish to Consider adding more to your pension pot.
Increasing your pension contribution will reduce HMRC’s income.
So if you earned £53,000 per year but paid £3,001 into your retirement fund, you would fall back below the limit and keep all child benefits.
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