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Nine things to do ahead of price increases in April including a free £252 for couples

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Households face a year of staggering price increases as energy costs continue to rise and inflation continues to rise.

The price cap, which limits how much households can be billed for gas and electricity, will rise by £693 next month as a social security tax hike comes into effect.

To ease the pain, the Chancellor pays homes in AD bands a £150 tax rebate and everyone else gets a £200 energy credit.

For workers, some earners may now find themselves exempt from the NI increase.

All in all, it means it’s time to get your finances in order.

From applying for work-from-home tax breaks to the marriage tax credit, here are some key money moves you need to make now to start bringing your money forward starting in April.

1. Get £125 from the Inland Revenue

Millions of people who worked from home over the past year have until April 5 to claim £125 in tax relief from HMRC.

The home office discount also applies if you have only worked from home for one day – and can be easily applied for online.

The money, which can cover broadband and heating costs, will be automatically refunded with your next payslip with appropriately adjusted tax number. You do not need to submit receipts to make a claim.

The rebate is paid based on the rate at which you pay tax.

Example: An employee who pays the 20% basic tax rate and takes a tax credit of £6 per week will receive £1.20 per week tax credit (20% of £6 per week) for the cost of his household bills.

You can claim £2.40 per week if you pay the higher tax rate of 40%.

Over the course of a year, this means workers could reduce the tax they pay by £62.40 or £124.80.

If you miss the deadline, you will not be completely banned. HMRC told The Mirror you’ll have to apply for it separately and will receive a lump sum payment instead. If you’ve had to work from home because of the pandemic, you can currently backdate that two years.

Here’s how to get the money back.

2. Take advantage of the marriage grant

Millions of couples can claim a £252 tax break thanks to a little-known law that allows you to share your allowance with your partner.

Known as the marriage allowance, it allows people with an income of £12,571 or less to transfer up to £1,260 of their personal allowance to their husband, wife or domestic partner – if their income is higher.

This will reduce her tax by up to £252 for tax year 2021-2022. Claims can also be backdated four years to April 2018.

If an application is made retrospectively, the couple can get up to £1,220 back.

Here’s how to make a claim.

3. Charge your Lifetime Isa

The Lifetime Isa is one of the best savings options out there – and can get you free money from the government to invest in your first home or retirement.

This allows you to receive up to £1,000 a year in government bonus up to the age of 50.

If you opened a lifetime Isa by the age of 18, that’s a maximum state bonus of £33,000 (or £32,000 if you’re unlucky enough to have your birthday on April 6th).

The Lifetime Isa can be opened by anyone aged 18 up to the day before their 40th birthday and you can save up to £4,000 each year – either in one or more lump sums or as a regular monthly savings.

You can withdraw Lifetime Isa money once you reach the age of 60 or earlier to buy your first property, but all other withdrawals carry a penalty – currently 25%.

The submission date for this tax year is April 5, 2022.

4. Check your child benefit entitlement

The UK’s high Income Tax on Child Benefit (HICBC) leaves thousands of parents with a tax bill every year in the UK, but a little forward planning could top that.

All parents are entitled to child benefit, but as soon as one of them earns more than £50,000, the amount starts falling. This is then fully withdrawn when they reach the £60,000 salary threshold (read more here).

You can of course opt out of payments entirely to avoid having to fill out a tax return every year, but remember to do this through HMRC as it could otherwise affect your State Pension credits.

If you’re earning just over the limit, there’s a way out – by increasing your pension contributions.

HICBC is based on your salary after any pension deductions. That means if you contribute enough to your pension to bring your salary back up to £49,999, you’ll get full child benefit again.

Another option is to use income above the £50,000 limit to make donations to charity, which you must declare on your tax return to HMRC.

Don’t forget that child support payments will also increase next month.

5. Check your council tax

Households across the UK face huge council tax hikes from April as the cost of living crisis deepens.

The official ceiling for council tax increases by local authorities is 5% – this consists of a 2% increase in council tax and an additional 3% for social benefits.

Councils can technically ask for more, but they have to hold a referendum with residents first.

All new municipal tax rates always apply from the beginning of April, in line with the new tax year.

If you are retired, living alone, on welfare or have a disability, you should check if you can apply for a reduction.

Millions of people may also be in the wrong tax bracket. If you act now, you may be able to avoid the surge altogether.







Don’t forget that child support payments will also increase next month
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Image:

Alamy Stock Photo)

6. Increase your pension contributions

As with your Isa, it may be worth adding to your pension to increase your savings for retirement where you can afford it.

With pension savings, you receive income tax relief depending on your personal circumstances.

The annual allowance for 2021/22 for pension contributions is £40,000. Also note that you can bring forward unused allowances from the last three tax years if you were a member of the pension scheme in those years.

If you have been automatically included in a company pension, the window for all changes to your contributions, including active salary losses, will open immediately.

You and your employer must pay a percentage of your income into your company pension plan. These minimum amounts are currently 4% from you and 3% from your employer. If you can afford to increase your payments, now is the time to do so.

7. Use up your Isa allowance

The Isa allowance for tax year 2021-22 is £20,000 – and as usual all returns are tax free.

However, before you move your money or open an account, see if an Isa is the best way to save for you.

That’s because Isas are in addition to the Personal Savings Allowance (PSA), which went into effect on April 6, 2016.

If you’re a property taxpayer you can earn up to £1,000 tax-free in savings income. For higher taxpayers, that’s £500.

In short, this means you can choose a non-ISA savings account and still benefit.

For example, if your checking account provider has a savings account with a high interest rate, you may find it more convenient to deposit your money there instead. In any case, it is tax-free.

If you choose an Isa, you must move your money before April 5 to take advantage of the full tax-free year.

8. Reclaim money for work clothes

Millions of hospital workers, shop workers and hairdressers don’t know they could recover their expenses from HMRC if they had to pay for uniforms last tax year.

It’s easy to claim and the average payout is around £60.

You can find out exactly how much you are owed by following the steps below this online tool – each complaint takes about three weeks.

Who can claim it?

You can claim tax relief if:

What can I claim?

  • Repairing or replacing small tools needed for their job (such as scissors or a power drill)

  • Cleaning, repairing, or replacing specialty clothing (e.g., a branded uniform or safety boots)

  • Service kilometers (no commute)

  • travel and accommodation expenses

  • Professional fees and subscriptions

9. Council Tax

Billpayers are advised to set up a direct debit for their council tax payments before April to ensure they receive their £150 refund on time.

The energy rebate program was announced by the Chancellor earlier this month to help people cope with soaring energy bills.

It will see eligible households in England in Council Tax Bands AD properties receive a £150 energy rebate payment from their council from April this year.

This includes those who are already receiving help paying some or all of their municipal bills through local government tax assistance.

Cllr Shaun Davies, Chair of the Local Government Association, said: “By setting up a direct debit, local authorities can automatically pay the £150 energy rebate directly into your bank account. Payment of council tax by direct debit can be set up quickly and easily via your municipality’s website.

“You can still get the money if you don’t have direct debit set up, but it could take longer as your council has to contact you and then you have to make a claim.”

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https://www.mirror.co.uk/money/nine-things-before-april-1-26544346 Nine things to do ahead of price increases in April including a free £252 for couples

Fry Electronics Team

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