TAX RELIEF is applicable to a number of contributions, payments and donations, but millions are often unaware of the money which they could claim back, and they are urged to take action to remedy this.
Tax relief often involves Britons being paid tax back from HMRC on payments made in certain areas of life. This applies perhaps most prominently to pension contributions and charity donations. But many people are also able to claim tax relief for their career-related expenses, for example, when using their own money to purchase items needed for their job.
While some types of tax relief can be received automatically, people may have to apply for others.
For this reason, it is often important to take a proactive role, to ensure one gets all of the money to which they are entitled.
And at a time where every penny counts due to the financial impact of COVID-19, understanding tax relief is key.
Fortunately, there are certain actions which can be undertaken to help in this process.
These have been outlined by Paul Gibbons, COO at PayDashboard, who provide further insight into how people can ensure they aren’t missing out.
One of the first actions it is important to take is checking an individual’s tax code.
This is because millions of people are put on the wrong tax code each year, meaning many are due tax refunds but may not even realise it.
Incorrect tax codes often result in tax overpayment, and it can be a lengthy process to wait for a rebate, or adjust this accordingly.
To ensure people have the right tax code, Mr Gibbons has recommended checking a payslip and then matching the tax code against a list outlined on the HMRC website.
In a similar way, when changing jobs, checking a tax code can be important, as new starters often find themselves on an emergency tax code.
This means paying tax at an incorrect rate for a number of months, until records come up to date, so acting sooner rather than later could be beneficial for Britons’ pockets.
An important step to take, particularly amid the COVID-19 crisis, is claiming tax relief through payroll if working from home.
Many Britons fail to realise, Mr Gibbons said, that they may be able to claim £6 per week tax-free in expenses for every week they work from home.
This is achieved through an adjustment to a tax code, and to obtain the tax relief, all people need to do is complete the online P87 form.
Finally, for those who are married or in a civil partnership, the Marriage Allowance could prove particularly valuable in terms of tax relief.
If one person in a relationship earns less than £12,500, and the other is a basic rate taxpayer then the couple can offset 10 percent of the tax-free allowance from the lower paid person to the higher earner.
As a result, in this tax year alone, people may end up saving £250.
And as the action can be backdate by up to five years, married Britons could end up receiving £1,188.
Mr Gibbons explained those who believe they are eligible can check the HMRC website to see if they can claim and action their application here as well.
For those looking to understand the individual tax relief they could be entitled to, heading over to the government website is likely to provide further clarity.
A number of tax relief calculators for income tax and pension tax relief are also available through organisations such as Hargreaves Lansdown, Prudential and Which?.