Filing your self assessment tax return may be daunting, especially if you are a beginner in the tax rules and due dates. Many taxpayers make common mistakes that can lead to penalties, overpayments, or forfeited deductions. To ensure that filing a is a success, it is necessary to be aware of these pitfalls and take proper measures to avoid them.
1. Missing the Filing Deadline
The most frequent mistake is failure to file the Self Assessment tax return on time. The key deadlines are:
- 31st October – Deadline for paper tax return
- 31st January – Deadline for online tax return
- 31st January – Deadline for payment of any tax owed
Failure to meet these deadlines carries an automatic penalty of £100, which is larger if the delay exceeds three months.
2. Inaccurate or Missing Information
Errors in your tax return, such as incorrect figures or missing information, will delay processing and result in additional inquiries from HMRC. Ensure you thoroughly check details such as:
- Your National Insurance number and Unique Taxpayer Reference (UTR)
- Income from every source, including employment, self-employment, renting out property, and dividends
- Any tax reliefs or deductions you’re claiming
3. Failing to Include All Your Income
The most common error is failing to include all of your taxable income. This consists of:
- Self-employment profits
- Rent from residential property
- Interest on savings and investments
- Income over time, if applicable
Failing to report all sources of income may lead to an HMRC investigation and underreporting penalties.
4. Forgetting Allowances and Deductions
Unclaimed tax allowances and reliefs are prevalent for taxpayers, who might save a great deal in taxes. Do not forget to verify eligibility to:
- Personal Allowance (£12,570 for most taxpayers in 2023/2024)
- Trading Allowance (up to £1,000 of tax-free profit from self-employment)
- Business expenses (professional subscription fees, mileage allowances)
- Charitable gifts and pension payments with tax relief
5. Not Maintaining Proper Records
HMRC requires taxpayers to maintain records of income and expenditure for at least five years from the deadline for filing on 31st January. These consist of:
- Business invoices and receipts
- Bank statements
- PAYE records and pension payments
- Records of any capital gains or investment income
- Without proper records, you could struggle to defend claims or rebuff an HMRC audit
6. Paying the Wrong Amount of Tax
Some taxpayers overpay or underpay their tax. While overpayment denies you of available funds, underpayment could lead to HMRC penalties. To obtain the most accurate tax calculations, you can:
- Use an online Self Assessment tax calculator
- Cross-check HMRC’s estimated tax calculations against your personal records
- Seek professional advice if you’re unsure about liabilities and deductions
7. Failure to Respond to HMRC Correspondence
When HMRC contact you regarding disparities or missing information and you fail to respond in a timely manner, you will be subjected to further penalties. Always check your HMRC account and emails for notifications and requests.
8. Failure to Budget for Tax Payment
Self-employed individuals and landlords have a tendency to overlook saving enough towards their tax bill. Since HMRC requires payment in two instalments (January and July), budgeting during the year will keep you from falling behind on your obligations.
Get Expert Help with Your Self Assessment Tax Return
Avoiding these common mistakes will cost you time, money, and unnecessary stress. If you need assistance, UK Property Accountants offers expert assistance with tax returns to ensure compliance and maximise your tax efficiency.
Need help? Contact UK Property Accountants today to file your Self Assessment tax return on time and correctly!