January is the dreaded month when the HMRC’s deadline for submitting a self-assessment tax return looms. If you haven’t already completed the online tax return, then you’d be wise to familarise yourself with the most common Self Assessment tax return mistakes – and how to avoid them.
While there are stiff penalties for filing a tax return late, you can also get into trouble with HMRC for not taking care with your answers. The taxman won’t take into account any lame excuses for mistakes made or a late return!
So, here are the most common errors people make with links to more essential reading under each section.
1. Registering too late
Registering with HMRC can take weeks, particularly during busier periods. To avoid any penalties for late submission, ensure you register well in advance so you can have your Unique Taxpayer Reference (UTR) number activated in time. Your UTR is a 10-digit number that you need to access your HMRC online account.
Read: How to Get a UTR Number from HMRC
2. Incorrect UTR or National Insurance number
Forgetting or entering your National Insurance Number, Government Gateway user ID or password wrongly is likely to prevent you from filing your self-assessment form. It’s vital to include these and enter them correctly. If you’ve registered for self-assessment previously, you can find these numbers on older tax returns or any other correspondence from HMRC.
Read: What to Do If You Have Lost Your HMRC User ID and Password
3. Wrong tax code
A tax code is found on any payslips and reports how much tax you should be paying. If it’s entered wrongly, you could pay more or less tax than necessary.
Read: Understanding HMRC Tax Codes
4. Not checking calculations
When you report any figures that are deliberately inaccurate, then you’re likely to face prosecution. That said, it’s easy to make mistakes and in this instance, you have until the following 31st January to amend the tax return.
Read: How to Amend Your Tax Return
5. Claiming un-claimable expenses
There is a long list of allowable expenses you can claim to reduce your tax bill. This is where HMRC allows any tax-deductible expenses to offset against your annual tax bill. However, if you claim for disallowable expenses or inaccurate expenses, you can be penalised for any incorrect claims.
Read: Self Employed Expenses – What Can You Claim?
6. Inadequate record-keeping
Another common self-assessment tax return mistake is not keeping the proper paperwork. Examples of records can include anything from a P45 to invoices and bank statements. If you have inadequate record keeping, it’s likely you’ll make mistakes on the form. Plus, HMRC states you need to keep these records for 5 years in case of an investigation by a tax inspector.
Read: How to Track Income and Expenses
7. Inaccurate income
Innocent or guilty, if HMRC believe that you’re hiding particular earnings, you could face prosecution. Therefore, ensure you include all sources of taxable income, such as savings, Capital Gains, benefits, bonuses and payments. However small you may think the amount is, make sure you report it.
Read: What Counts as Taxable Income in the UK?
8. Overlooking payments on account
When you file your self-assessment tax return, you have to make 2 payments on account each year – one on 31st July and the other on 31st January. If you don’t plan for this advanced payment, including Class 4 National Insurance contributions, you could end up with a bigger tax bill in January.
Read: HMRC Payments on Account Explained
9. Failing to submit the form
One of the most common Self Assessment mistakes people make is not pressing the ‘submit’ button at the end. To double check you have done this, you should receive a confirmation email. Also, don’t forget to sign and date the form too.
Read: Tax Return Guides
10. Other common self-assessment tax return mistakes
- Forgetting pension contributions: if you’ve made any pension contributions, you could qualify for tax relief, resulting in a bill reduction.
- Not declaring charitable donations: any money you have donated to a registered charity through Gift Aid can also help to reduce your tax bill.
- Forgetting to include supplementary pages: any extra income which isn’t covered in your main tax return needs to have additional pages; for example, life insurance pay out or overseas property.
- Not including information from PAYE jobs: if you’re self-employed and employed, you need to report any income and taxes from PAYE to HMRC. You can find this information on your P60 or P11D.
- Forgetting the High Income Child Benefit Tax Charge: If you and your partner earn more than £50,000 per year and receive Child Benefit, then you have to pay this tax charge so you need to include it on the form.
- Ticking the wrong boxes: use the HMRC guide which is included with your tax return so you know the relevant boxes to tick that are unique to your situation.