The Money Saving Expert has issued a stark warning to Brits who have been left out of pocket due to a ‘harsh’ tax rule that can’t be undone
Martin Lewis has pointed out a tax issue that Brits won’t be able to recover their lost money from. In his Not The Martin Lewis Podcast, one listener shared a complex tax problem. He explained that he had received some backpay in the tax year 2022/2023 which pushed him into a higher tax band for the tax year 2023/2024, resulting in him paying more income tax.
If he had received the pay rise when it was originally due, he would have paid less tax as he wouldn’t have been pushed into the higher bracket. Desperate for a solution, the fan asked the experts how he could “go about getting the tax back”. Tax expert Rebecca Benneyworth, part of Martin’s panel, bluntly stated: “You can’t,” which prompted a surprised “Oof that’s harsh,” from the titular star.
Another tax expert, Kari Mellon, agreed that they wouldn’t be able to recover their extra tax burden through no fault of their own because “employment income is taxed when you receive it” not when it is earned. But she also mentioned an exception to this rule when “it relates to a breach of your contractual rights”.
Kari elaborated: “You can speak to your employer for them to treat it as if it was taxed in the year it accrued and would have been subject to a lower tax rate.” She added that the three contractual breaches she would look for are “holiday pay, minimum pay and equal pay”.
Martin concluded: “In that case you can ask for it to be calculated in the year it should’ve been earned but in every other case there’s nothing you can do about it? Feels a bit harsh doesn’t it,” prompting murmurs of agreement from his experts before moving onto the next tax-related question from viewers.
