Seven tax perks to save £1,000s before April – but millions are missing out
LOW earners will pay hundreds in extra tax due to a stealth raid on workers.
Income tax thresholds have been frozen since 2021, dragging more people into higher tax brackets as wages rise.
Households are now set to pay a record amount this year despite the recent cut to National Insurance rates.
For someone earning £23,000 it means an extra £401 a year going to HMRC, analysis by broker Interactive Investor found.
So it’s more important than ever to take advantage of perks before the tax year ends in April.
Here, Laura Purkess outlines all the tax allowances on offer and how to claim them.
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Marriage allowance
LOW-EARNING couples who have tied the knot could save £252 a year with the marriage allowance.
This allows one partner to share ten per cent of their £12,570 tax-free personal allowance with the other to reduce their tax bill if they have it spare.
Two million couples are missing out on this. You can claim it on the government website.
Claims can be backdated for up to four years, saving £1,260 in total.
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Tax-free childcare
CHILDCARE costs a fortune but you can claim up to £2,000 for it each year for every child under 11 .
This is on top of the 30 hours of free childcare, if you are eligible for both.
The allowance is split into £500 payments each quarter and you can claim double if you have a disabled child.
To be eligible both parents must work 16 hours or more a week and earn at least the minimum wage. See gov.uk/tax-free-childcare.
Trading allowance
SAVVY sellers can make up to £1,000 a year from flogging goods or services with the trading allowance.
This could save basic-rate taxpayers up to £200 a year in tax.
Laura Suter, head of personal finance at investment firm AJ Bell, says: “It’s great for people doing a bit of work on the side such as babysitting, selling items, dog-walking or even selling jam at their local market.”
Rent out your home or driveway
EARN up to £1,000 tax-free from your property, such as by renting out your driveway or letting out your home on Airbnb while you are on holiday.
The allowance could save you £200 a year from HMRC. If you don’t drive, apps like JustPark let other commuters use your parking space while you pocket the cash.
Renters need to get their landlord’s permission to let out their house while they are away.
Also check with your home insurer.
Savings allowance
EARN £12,570 to £17,570? You could get up to £5,000 interest on your savings tax-free, saving you £1,000.
It is most likely to apply to OAPs who get only a state pension but have cash banked.
If you earn more, you can still make £1,000 in interest tax-free, saving a basic-rate taxpayer £200.
In a normal year, most low earners wouldn’t expect to make even £1,000 interest.
Higher rates on savings recently mean 5.5million people breached the threshold in November last year.
Pensions allowance
PENSIONS provide great tax breaks while boosting your retirement savings.
Some of the money you would have paid in tax to the Government goes into your pension pot instead.
This is because it comes out of your salary before being taxed.
For basic-rate taxpayers, you get £1 back for every 80p you put into your pension.
You can pay up to £60,000 a year into your pension tax-free.
‘I saved £252 with my tax return’
DOG-walker Zita Wells, 54, heard about the marriage allowance on The Martin Lewis Money Show on TV.
Zita runs animal care service Pet Patrol 365 in East Sussex.
Her husband retired from his building job three years ago and is on a very low income so Zita can claim ten per cent of his personal allowance.
“I saved £252 when I filed my tax return this year,” says Zita.
BANKS BRING BACK UP TO £200 SWITCHING BONUSES
SWITCHING bonuses are returning to entice new customers after previous deals dried up in January.
Banks and building societies regularly run limited-time offers to draw in new business.
The offers usually require you to move your current account over, which can be done through the Current Account Switching Service (CASS).
NatWest relaunched its £200 incentive for new customers this week after pulling it in September.
To get the cash, you need to deposit £1,250 into the current account and log into the mobile app within 60 days of switching.
The bank won a record number of new customers when it ran the offer last year.
It recorded almost 100,000 switches through the CASS between July and September.
Meanwhile, Lloyds Bank offers customers £175 to switch to a Club Lloyds account.
The offer is open to new and existing customers between now and March 28.
The account charges a £3 monthly fee if you pay in less than £2,000 a month.
But it comes with extra perks such as a free Disney+ subscription and cinema tickets.
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Co-op Bank, TSB and First Direct pulled their switching offers in last month.
Meanwhile, offers from HSBC and Nationwide expired last year.
FCA CRACKS DOWN ON BNPL FIRMS
CITY watchdog the Financial Conduct Authority is cracking down on buy now, pay later providers.
It has forced six firms to change the terms of their customer contracts after it found them to be “potentially unfair or unclear”.
The latest figure was disclosed during a debate in the House of Lords.
Sun Money revealed in January that the Government has further delayed plans to regulate the BNPL sector.
Its products let people defer or spread the cost of purchases over a set time frame, interest-free.
As the products are currently not regulated, users are not covered by the same protections as other credit agreements and firms do not have to follow the same rules.
Research by the FCA has shown BNPL products are associated with higher use of other credit and signs of falling into financial difficulty.
Plans were first announced to regulate it in 2021.
Chancellor Jeremy Hunt said last month it is taking “longer than expected” and could not confirm whether regulation would be seen by the next election.
An FCA spokesman said: “We are ready to regulate the BNPL sector once a final decision is made.”