Woman warns 'getting a tax return is a really bad thing'

A woman checks her finances
-Credit: (Image: Getty)


Over the last few months, there has been a growing trend on TikTok as young people show off some of the first tax returns they’ve received in their working careers with many saying it feels like getting “free money”. However, one influencer is revealing the downsides to these lump sums.

Software engineer Yella, who has garnered a few thousand followers on her TikTok page focused on finances, admitted even she took part in the trend by posting clips explaining how and when people can claim their returns. But she highlighted that getting to this point is already detrimental to your finances, even saying: “It’s actually a really bad thing. If you don’t have a tax return due, you’re lucky.”

The influencer explained that receiving a tax return is because you have been overtaxed every single month. She continued: “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 people on the platform boasting some returns of £1,000 or more, this is a substantial chunk of interest and investment potential they have lost since the beginning of the previous tax year. Yella pointed out: “They’re never going to pay you back for that.”

Instead of flaunting their returns, the influencer urged people to ensure they don’t need one by having the correct tax codes on their payslips and avoiding getting the emergency codes that come with a much higher tax rate and usually end in W1, M1 or X. She added: “Most people’s tax codes are 1257L, this means you can earn up to £12,570 a year tax free.”

The influencer also pointed out you don’t need to wait for tax return season, which is usually around October, to fix any issues with your tax code or claim back tax you’ve been overpaying. For university students working between their studies, Yella emphasised that they need to check they aren’t also getting student loan deductions on their paychecks. She explained: “They only start once you finish uni.”