10 Common Self-Assessment Tax Return Mistakes

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As we begin the new year many people are now preparing their self-assessment tax returns to be filed. However, leaving your tax return until the last minute can lead to mistakes. Here are 10 common mistakes to avoid.

  1. Not declaring all income

Various types of income must be included on your tax return, failure to declare all relevant income (including capital gains) can result in penalties. Some of these include;

  • Employment income
  • Pension income
  • Interest income (excluding ISAs)
  • Dividend income
  • Property income
  • Foreign income
  • Capital gains from the sale of assets (i.e. property, shares, investments)

You do not need to include income from premium bonds, national lottery, gambling winnings, or interest awarded for damages for injury or death.

  1. Claiming expenses that cannot be claimed

There are complex rules around expenses you can and cannot deduct. Some expenses that cannot be claimed are;

  • Entertaining
  • Depreciation
  • Non gift aid donations
  • Customer gifts over £50
  • Governing body penalties & fines
  • Some legal fees
  1. Forgetting deadlines

Deadlines for filing a self-assessment tax return are;

  • Paper returns must be filed by 31st October
  • Online returns must be filed by 31st January
  • Payment of liabilities by 31st January

Registering for self-assessment as soon as possible is advisable as receiving a UTR number can take a while, and HMRC does not always give it to you over the phone. A UTR number is usually received within 10 days and is needed to file the return.

  1. Forgetting about tax reliefs

Some forget about the various tax reliefs available such as;

  • Tax-free allowances;
    • Personal allowance - £12,570 (this reduces if your income is over £100,000)
    • Transferable Marriage allowance - £1,260
    • Blind person allowance - £2,520
    • Self-employment trading allowance – first £1,000 (if not claiming other expenses)
    • Property allowance – first £1,000 (if not claiming other expenses)
  • Self-employment allowances;
    • Trading allowance – first £1,000 (if not claiming other expenses)
    • Home office allowance – you can claim a proportion of your home costs used for business or use a flat home allowance of up to £26 per month.
    • Mileage allowance – first 10,000 miles at 45p per mile, 10,000 + at 25p per mile (cannot be claimed if claiming expenses for business vehicle)
  • Property allowances;
    • Property income allowance – first £1,000 (if not claiming other expenses)
    • Rent a room scheme – first £7,500
    • Private residence relief – if you live in the rented property for some time (on disposal)
  • Investment allowances;
    • Capital gains allowance - £12,300
    • Dividend allowance - £2,000
    • Savings interest allowance - £1,000 basic rate taxpayer, £500 higher rate taxpayer, £0 additional rate taxpayer
  • Pension allowances;
    • Private pension tax relief – contribute up to £40,000 per year or 100% of your relevant income (whichever is lower)
  1. Forgetting about payments on account

When a person's tax liability is over £1,000 HMRC request payments on account are made for the next tax year and are usually 2 payments of 50% of the previous tax year's liability and are made in January and July.

  1. Incorrect figures

Any error can result in penalties and interest being charged and any errors found to be deliberate can result in prosecution. Double-check all calculations.

  1. Incorrect UTR & National insurance numbers

This can result in the return and liabilities being allocated to the wrong account.

  1. Forgetting to date & sign the return

If you are filing your return by paper, you must make sure the return is signed and dated in the right places.

  1. Getting your tax code wrong

You could be paying too much or too little tax. For example, if you have 2 jobs your personal allowance should be allocated to one or apportioned to both, it could be both jobs are claiming the allowance and the tax is incorrect.

Your tax code is adjusted for job expenses such as cleaning of uniform, working from home, professional fees and subscriptions, traveling, etc.

  1. Forgetting to enclose supplementary pages

Additional income not covered by the main tax return needs to have supplementary pages included.

What to do if you find a mistake?

If you make a mistake on your tax return, you must inform HMRC as soon as possible. You normally have 12 months from the submission deadline to amend the return. For example, the 2021/22 tax return must be filed by 31st January 2023 and you will have until 31st January 2024 to file any amendments.

There are a lot of complex tax rules around the various points above and for peace of mind, a lot of taxpayers ask for the assistance of an accountant to help them complete their tax return. Some accountants also offer their clients a fee protection service which will cover the fees incurred for the accountant to assist in any investigations the revenue may carry out into the returns filed.

If you require any assistance in preparing your self-assessment tax returns or want to discuss our fee protection service, please call, or email me and I will be happy to help.

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