Most people assume that once their payslip is processed or their tax return submitted, everything is taken care of. Every year, millions of people overpay tax in the UK. They are simply unaware of the allowances and reliefs. Small tweaks could save them hundreds — even thousands. Here are five surprisingly common ways people pay too much tax, and how you can avoid being one of them.
1. Not Claiming Work-from-Home Expenses:
Since the pandemic, more people work from home either full-time or just a day or two per week. What many don’t realise is that if you work from home even occasionally for your employer, you can claim tax relief for additional household costs.
HMRC allows a flat-rate claim of £6 per week without needing to provide receipts. For a basic-rate taxpayer, that’s over £60 per year back in your pocket.
Tip: You can backdate claims up to four tax years if eligible.
2. Forgetting to Claim Marriage Allowance
If you’re married or in a civil partnership, and one of you earns below the personal allowance (£12,570), you can transfer up to £1,260 of unused allowance to your partner. That can reduce their tax by up to £252 per year.
Bonus: You can backdate your claim up to four years and claim refunds — potentially over £1,000!
Real Case: One of my clients had never claimed Marriage Allowance and was refunded over £1,000 after I helped him apply. His previous accountant never mentioned it.
3. Missing Gift Aid Relief (Especially for Higher-Rate Taxpayers)
If you donate to charity and tick the Gift Aid box, the charity gets 25% extra from the government. But if you’re a higher or additional-rate taxpayer, you can also claim tax relief for the extra amount donated.
Example: Donate £100. Charity gets £125. You can claim back another £25 through your Self-Assessment.
Tip: You can include donations from the previous year if you act before the return deadline.
4. Ignoring the Rent-a-Room Scheme
Do you rent out a spare bedroom or host guests via Airbnb? The Rent-a-Room Scheme allows you to earn up to £7,500 per year tax-free from letting out furnished accommodation in your home.
This applies even if you rent, provided your landlord allows subletting.
Tip: If you earn below the limit, you don’t need to fill in a Self-Assessment form at all!
5. Using the Wrong Tax Code
Your tax code determines how much tax is deducted from your income. If it’s incorrect, you could be paying too much. For example, this can happen because of a company car you no longer use or a second job.
Check your tax code on your payslip or via your HMRC personal tax account.
Tip: I’ve helped clients correct their tax codes and recover hundreds in overpaid tax without any penalties.
Conclusion: Are You Overpaying?
Overpaying tax is more common than you think — but it doesn’t have to be. Whether it’s a missed allowance, incorrect tax code, or overlooked relief, a little awareness can go a long way.
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