Five tax tricks to improve your wealth
Filed under: Tax
Here, we highlight five of the tax rebates that could improve your wealth.
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If you wear a uniform of any kind to work and have to wash, repair or replace it yourself, you may be able to reclaim tax paid over the last four years. For some people, this could mean a windfall worth hundreds of pounds.
The standard allowance for spending on uniform maintenance this tax year is £60, meaning that basic-rate taxpayers can claim £12 - or 20% of £60 - back each year and higher-rate payers can claim double that amount.
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However, people working in some professions such as nursing can claim more. To make a claim, write to HM Revenue & Customs giving details of your employment and uniform requirements.
2. Savings tax
The interest you receive on savings accounts (with the exception of cash Isas) is automatically taxed at a rate of 20%.
Higher-rate taxpayers therefore tend to owe money on the interest they are paid throughout the year. If, however, you are on a low income or not earning at all, you should be able to claim all or some of the tax deducted back.
You can find out more about the allowances for this tax year here. If you know that your level of income does not require you to pay tax, though, you can simply complete a form R85 - available online or from your account provider.
3. Vehicle tax
You can apply for a refund of vehicle tax if you are the current registered keeper or were the last registered keeper of your vehicle that no longer needs a tax disc.
To do this, you will need to tell the Driver and Vehicle Licensing Agency (DVLA) why the tax disc is no longer required, for example because the car has been sold, scrapped or stolen. If you have the tax disc, it too should be sent back.
The DVLA website can give you more details on eligibility and how to make a claim.
4. Pension tax
If you pay tax on a company, personal or State Pension through PAYE (the system employers use to deduct tax from your wages), you may well end up overpaying.
Depending on your individual circumstances, the difference could be several thousands of pounds, so it is definitely worth contacting HMRC to find out - especially as you must generally make a claim within four years to qualify for a refund.
If, meanwhile, you are on a low income and have a purchased life annuity investment, 20% tax will be automatically deducted from the income element you receive from it.
However, you can register to get the income tax-free - as well as a refund of any income tax you have overpaid over recent years.
To do so, complete the R89 Application form and send it off to whoever pays your annuity provider.
5. National Insurance (NI) contributions
There is a limit to the amount you need to pay in NI, whether or not you work for an employer.
Instances in which you may find that you have overpaid include if you work two or more jobs and earn more than £817 a week and if you move from self-employment to employment, but continue to pay Class 2 National Insurance contributions.
HMRC often contacts you if it sees that you have overpaid by £53.50 over the course of a year.
However, if you suspect you may have overpaid but have not been notified by the end of the tax year in April 2013, it is worth checking by writing to HM Revenue & Customs, Payment Reconciliation, National Insurance Contributions Office, Benton Park View, Newcastle upon Tyne, NE98 1ZZ.
You might end up several hundreds of pounds richer as a result.
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