Martin Lewis: Three must-dos by 5 April

Former_MSE_James_F

There's just weeks left to submit claims potentially worth £100s on everything from incorrect tax codes to uniform tax rebates. With all of these you can only reclaim for the past four tax years, so you need to act now for the 2017/18 financial year, warns MoneySavingExpert.com founder Martin Lewis during the final episode of The Martin Lewis Money Show Live. Here's all you need to know.

Read the full story here:
'Martin Lewis: Three must-dos by 5 April 1) Tax code rebate 2) Marriage tax allowance 3) PPI tax back'

Click reply below to discuss. If you haven’t already, join the forum to reply.

[Deleted User]

Wouldn't this be better in the Work, Benefits & Business sub given that has a sub specifically for tax rebates etc?

I get the PPI tax angle but this forum isn't used very much so people might miss it

Andyaero

Regarding the PPI tax back element of this, 2 years ago I received a substantial payout from various banks in PPI settlement. As the interest part of the payout was reduced by 20%, but I was and still am a 40% rate payer, is it in my interests to try and claim the tax back or will they send me a charge for the additional 20%?

Dazed_and_C0nfused

Andyaero said:

Regarding the PPI tax back element of this, 2 years ago I received a substantial payout from various banks in PPI settlement. As the interest part of the payout was reduced by 20%, but I was and still am a 40% rate payer, is it in my interests to try and claim the tax back or will they send me a charge for the additional 20%?

Impossible to say without full details.

It's possible that you could be due a refund as £500 of any interest would be taxable at 0%.  

But you may well owe some additional tax irrespective of this.  Which you should really be advising HMRC of yourself.

Andyaero

At the time I don't recall being given any advice that the 8% interest payment that was reduced by 20%, should have been reduced by 40% if I was a higher rate payer. Is that the case?
Or would the tax % relate to the time PPI was overpaid rather than when it was paid back to me. In which case I would have been a 20% payer.

Dazed_and_C0nfused

Andyaero said:

At the time I don't recall being given any advice that the 8% interest payment that was reduced by 20%, should have been reduced by 40% if I was a higher rate payer. Is that the case?
Or would the tax % relate to the time PPI was overpaid rather than when it was paid back to me. In which case I would have been a 20% payer.

The company making the PPI refund was obliged to deduct 20% (basic rate) tax from the taxable interest element of the refund.

It is then down to individuals to sort their personal tax position, whether that be getting a refund or paying any extra tax due.

The interest is taxable in the tax year it was paid in, not spread over however many years it is paid in respect of.

Andyaero

Sorry, but to clarify then.....as a 40% tax payer, am I due to pay 40% on the 8% interest amount of the payout?

Dazed_and_C0nfused

Sort of.

The first £500 of any interest is taxed at 0% so the effective tax rate will be slightly less.

Let's say you have interest of £1,000

£500 x 0% = £0.00
£500 x 40% = £200.00
Total tax due = £200.00
Effective rate is 20%

Or interest of £3,000

£500 x 0% = £0.00

£2,500 x 40% = £1,00.00
Total tax due = £1,000.00
Effective rate is 33.3%

Andyaero

Thanks, perhaps I'll leave the past in the past.......

DiggerDogs

Thanks Martin.  Gave them a call, although took 50 minutes, and changed my code.  I took part time retirement and had a double pension payment on my 1st one.  That flagged I would be 50% tax payer with the pay I received in January, a particularly high one as the next month I had no commission, so deleted my tax code allowance!

MikemseForum

If you have Marriage Allowance already you need to check whether it still saves money.  After 5th April you can not backdate a change unless the marriage has ended.

My wife was below the Income Tax threshhold and I was a basic rate payer so she transferred £1260 to increase my allowance.  Our pensions have increased with CPI but the tax bands have not moved so I am now paying a marginal rate of 40% and ineligible for the allowance.  My wife's pension now puts her in the 20% band.

If she had cancelled the Allowance before 5th April she would be paying £252 less Income Tax.  Since I no longer benefit we are £252 worse off as a couple.  I have not seen this effect of stealth tax discussed anywhere and there was certainly no warning from HMRC.