CashNews.co
A finance guru has issued a stark warning to those celebrating hefty tax returns, cautioning that they might have missed out on “free money” amid the latest viral craze.
The TikTok sphere has been abuzz in recent months with young workers flaunting their first-ever tax refunds, many feeling as though they’ve hit a jackpot of “free money”.
But one savvy influencer is shedding light on the potential pitfalls of these windfalls.
Yella, a software engineer turned financial influencer with thousands of TikTok followers, confessed she had jumped on the bandwagon by sharing videos on how to claim tax returns.
Yet, she’s keen to point out that getting a tax return can actually signal a loss in personal finance, even stating: “It’s actually a really bad thing. If you don’t have a tax return due, you’re lucky.”
She elaborated that a tax refund means you’ve been overpaying tax each month. Yella added: “The taxman has been pinching your coins and it’s already the cost of living crisis so no one needs their payslip to be lower than it actually should be.
“Most importantly, if you’re someone who saves or invests, that money that they took out of your payslip could have been growing in interest and compounding this whole time.”
With some people flexing returns of over a grand, Yella highlighted the sizable interest and investment potential they’ve missed out on since the last tax year began. She remarked pointedly: “They’re never going to pay you back for that.”
Rather than showing off their gains, the influencer advised people to avoid needing a rebate by ensuring accurate tax codes are used in their payslips, sidestepping emergency codes like W1, M1, or X which carry steeper tax rates.
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She said: “Most people’s tax codes are 1257L, this means you can earn up to £12,570 a year tax-free.”
Yella also underscored that there’s no need to hang about until tax return time, typically in October, to adjust your tax code or recuperate any excess tax paid.
Focusing on uni students juggling jobs with their studies, Yella stressed the importance of confirming they aren’t prematurely coughing up for student loan repayments, clarifying: “They only start once you finish uni.”