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Five Common Self Assessment Tax Return Mistakes to Avoid

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Five Common Self Assessment Tax Return Mistakes to Avoid

The annual self assessment tax return is something that no small business owner really wants to deal with but begrudgingly does every year. Whilst I’d always recommend doing a bit of research online and finding a qualified accountant to make sure it gets completed correctly, there are many who prefer to do it themselves. Be warned if you go down this route though, that it’s all too easy to make a mistake. HMRC deals with thousands of self assessment tax return errors or late submissions every year, with many incurring fines.

Whilst an increasing number of the 11.2 million people in the UK who need to file a tax return are now using HMRC’s digital tax return form, many still opt for paper. If you are one of the slowly shrinking group of people who still opt for the old fashioned paper forms, be warned that it’s a lot easier to make mistakes and the deadline is sooner than if you were to file your tax return online.

Whatever medium you decide to use, there are some common tax return mistakes to be aware. Below I’ve gone through five of the most common.

  1. Missing Information

This is a hugely common mistake and one HMRC is trying to eradicate by making the information on self assessment tax returns clearer. This can range from forgetting to fill out PAYE information or neglecting to include any necessary supplementary pages. If you earn additional income not covered by the tax return, such as stock dividends, income from share schemes, taxable lump sums from overseas pension schemes or income from property, you will need to provide additional pages detailing this. This is a good example of why digital tax returns are better than paper ones, as it’s not possible to submit your tax return if you’ve not completed all the information on each page. That being said, it’s still easy to omit information on an online tax return.

  1. Missing the Deadline

This happens a lot and some of the excuses HMRC receive are pretty outstanding (as in outstandingly bad). It makes sense to get your tax return in early. Not only do you reduce the risk of missing that deadline, but if you leave it to the last minute and end up having to ring HMRC for information, then you could find yourself in for a long wait before you get to talk to a tax advisor.

  1. Not declaring all your Income

It’s often a legitimate mistake to overlook a source of income, especially if you have a lot. Be warned though, that ignorance is no excuse and there are severe penalties for failing to declare all your income and capital gains. If you are found to have omitted a source of income on purpose then you can be prosecuted. As well as income from employment, all income from pensions, benefits, capital gains, property, dividends and any foreign income need to be declared. Income from tax free schemes like ISAs does not need to be included.

  1. Incorrect Figures

Again this is easier to get wrong on a paper form than an online one, as the latter will do some of the calculating for you. Regardless of what medium you are using though, it’s important to go through all your income and expenses and make sure you have added them all up correctly.

  1. Claiming for Expenses that can’t be claimed

This is where using a qualified accountant really pays off, as what you can and what you can’t claim as an expense is actually fairly complex and detailed. If you claim for things you shouldn’t then you can face a significant fine so it pays to check that the expenses you are claiming are legitimate and allowed by HMRC. Of course this works the other way and there are loads of expenses that people regularly neglect to claim for. This is where a good accountant won’t just help you avoid costly mistakes, but will actually save you money by identifying expenses you aren’t claiming and should be.

Richard Symonds is the director and founder of Bristol based Trust Local and has been helping create growth opportunities local businesses since 2011. Richard has years of experience helping companies across a range of sectors build networks and establish trust amongst their customer base. You can connect with him on Twitter, Facebook or LinkedIn.

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