Martin Lewis has shed light on a tax predicament that Britons simply cannot recover their lost cash from.
In a heart-sinking moment for taxpayers, Martin Lewis delivered some grim news to a distressed listener who reached out during his Not The Martin Lewis Podcast, grappling with a thorny tax issue.
The troubled listener laid bare their situation, revealing they had received backpay in the tax year 2022/2023, inadvertently propelling them into a higher tax band for the subsequent year, resulting in a heftier income tax bill.
Had the pay increase been awarded when it was meant to be, the individual would have remained in a lower tax bracket, and avoided the additional tax.
Desperate for a solution, the listener implored the panel for advice on how to “go about getting the tax back”.
Tax guru Rebecca Benneyworth didn’t mince words as she bluntly asserted: “You can’t.”
The revelation prompted a shocked reaction from the Money Saving Expert himself, who exclaimed: “Oof that’s harsh.”
Fellow tax specialist Kari Mellon confirmed the unfortunate reality that the listener’s extra tax load, incurred through no fault of their own, could not be reclaimed since “employment income is taxed when you receive it” rather than when it was originally earned.
Nonetheless, Kari did offer a glimmer of hope, pointing out an exception for cases involving “it relates to a breach of your contractual rights”.
She advised speaking to the employer about potentially treating the payment as if it were taxed in the year it was due, which would have attracted a lower tax rate.
Kari identified three key contractual breaches worth investigating: “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,” he added, eliciting nods of agreement from his experts before they proceeded to tackle another tax query from the audience.
