When the country first went into lockdown in 2020, HMRC eased the regime, saying anyone asked to work from home was eligible to make claims if their costs had increased.
Workers could claim the tax break for the whole year even if they worked from home for just one day, saying: “We recognize that the work from home situation is very volatile at the moment, so we are accepting claims in full annual expenses”.
The rule relaxation was supposed to be a temporary measure that should end in April 2021, but the relaxation is still in effect. If taxpayers have not made a claim in previous years they can do so, meaning taxpayers with higher tax rates for this year and the last two tax years could claim a tax refund worth almost £400.
Higher pension tax reduction
Higher rate taxpayers can also backdate claims for unclaimed tax credit owed on pension contributions up to four years. Pension contributions entail pension tax credits at the same rate that you pay income tax, but the system means that higher rate payers automatically only get a 20% tax credit; they have to claim the rest manually via a tax return.
Research has shown that around a million higher-rate payers miss out on hundreds of millions in tax breaks each year, with eight in 10 taxpayers eligible for a reclaim not applying.
A similar four-year eligibility window exists for the marriage grant. This is a spousal tax benefit which allows a non-taxable partner to pass on £1,260 of their personal income tax allowance of £12,570 to a partner who pays income tax at the 20 per cent rate.
This allows for an annual tax saving of £252, or over £1,000 if you claim the last four years.
Around 2.5 million couples are thought to be missing out.
Increase in state pension for grandparents
Grandparents also face losing Social Security credits that could increase their state pension. They are eligible if they are caring for a child under the age of 12.
Not having even a year of Social Security credit means you could lose £20,000 in state pension payments over the course of twenty years of retirement, according to pension company LCP, which equates to £5 a week.
You need a total of at least 10 years on your Social Security to receive a state pension. To qualify for the full new State Pension, which is currently £185.15 a week, you need a total of 35 qualifying years of National Insurance contributions or credits.
The credit, known as Specified Adult Childcare, works by transferring the credits associated with the parent’s child support payment to a specific grandparent.
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