What’s Eating into Your Budget?
22nd January 2021
Tax refunds can be worth thousands of pounds each year, so it’s easy to think of them as some kind of magical, one-off prize. We all like to win, after all – particularly when there are large lumps of cash involved. The thing about the tax game, though, is that the rules are designed to play as fairly as possible, and the only way to lose is if you cheat yourself.
Tax Refunds and household bills
The money that comes in your tax refund never should have left your pocket in the first place. It’s a central part of your yearly budget, and when finances get a little tighter from time to time it really is worth treating it that way. We always love hearing about the wild adventures and extravagant treats RIFT customers blow their yearly tax refunds on. It’s an amazing feeling to know that we’ve put those dreams on the table for you. Even so, we’re every bit as excited to hear what else a tax refund can put on your family’s table when money’s tight.
Covering the cost of your weekly shop
Looking at the official figures from the Office of National Statistics (ONS), the average yearly food bill for a UK household is up around £4,800. That number’s based on a family of 2.4 people (which is an odd thing to imagine, but we’re going with it). It also takes both household shopping and meals out into account.
Looking at it that way, an average tax refund payout of £2,500 takes a huge bite out of that yearly food bill. On the other hand, anyone who isn’t claiming back what they’re owed is seriously missing out.
A Tax Refund Pays for a year's utility bills
Looking beyond food, ONS reports show that the UK’s blowing through about £113 a month in gas and electricity bills, divided fairly evenly between the two.
Families in the East Midlands are spending the least on these, with a total monthly energy bill of £110.50, while the South East and North Scotland both sit at the other end of the scale at £115.50 and £116 respectively.
That adds up to an average yearly energy bill of about £1,360 – which is easily wiped out of existence by a typical tax refund.
Use your tax refund to clear your debts
Of course debts will almost always ramp up faster than savings, so let’s look at what help your refund could be there.
An average UK household is usually sitting under a credit card balance of over £2,600. On top of that, we’ve got average personal loans of over £5,200, student loans totalling £4,912 and mortgage debts of £126,000 to tackle.
While it’s great to be able to spend a tax refund on a holiday or car, you’re almost always better off paying down at least some of what you owe first. In real terms, it’s actually better than saving the cash completely.
Putting your refund in those “real terms”, of course, is exactly what we’ve been talking about this whole time. Don’t think of your HMRC pay-out as something extra that you might look into at the end of the tax year. Your refund is an absolute legal right, and your only chance of levelling the playing field with the taxman. We’ve said it before, but it bears repeating: HMRC is never out to cheat you in the tax game. Just make sure you’re not cheating yourself out of your own money.
Talk to RIFT Tax Refunds about getting back what the taxman owes you. With the help of the UK’s leading tax experts, there’s everything to gain and no reason to lose out.
Check if you're owed a tax refund now and we can get your money back in your pocket with no fuss or hassle.