Self-Assessment tax mistakes and how to avoid them

Managing director of DSR Tax Claims David Redfern explains how to avoid Self-Assessment tax mistakes

28 Jan, 20

Managing director of DSR Tax Claims David Redfern explains how to avoid Self-Assessment tax mistakes

Company matters 3



Register for Self-Assessment

Basics first, it is essential that anyone who needs to complete a tax return for income received during the 2018/19 tax year is registered for Self-Assessment with HMRC.

Before you can submit a tax return, you have to register with HMRC and receive your Unique Taxpayer Reference (UTR).

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Additionally if you want to file your tax return online, and the deadline for a paper return has now passed, you’ll need to register for online Self-Assessment and receive your activation code for your online account.

HMRC sends these pieces of information by post and they take around 10 working days, longer at times, so time is of the essence if you haven’t done this yet.

HMRC accepts that there will be circumstances where a taxpayer cannot file their tax return on time but avoidable errors caused by disorganisation or just not realising this needed to be done won’t be accepted as a reasonable excuse.

Taxpayers can register for Self-Assessment and set up their online account through the Government Gateway website.

Record all income

Once registered, incomplete or inaccurate information is often the downfall for many taxpayers.

Taxpayers must ensure that they have recorded all forms of income received so that their tax bill is calculated correctly.

Most taxpayers when thinking of income will either focus on their self-employment income or the income they received from an employer, forgetting other forms of income like rental income, capital gains, share dividends, savings interest and foreign income.

Often overlooked are taxable benefits, such as statutory maternity pay, statutory sick pay and Jobseekers Allowance.

If you received any taxable benefits during the 2018/19 tax year, they also have to be included in your income.

Where possible, all figures in a Self-Assessment tax return should be actual not estimated figures.

Any estimates used should be clearly marked as such and amended for actual figures as soon as available.

Include expenses

Another common mistake when completing a tax return is omitting key expenses or failing to claim all available tax relief.

Sole traders and small business partnerships need to make sure they are claiming the tax relief on all their allowable expenses through their tax return, whether relating to essential equipment for the running of their business, mileage expenses or the costs involved in using one’s home as an office or workshop.

But not all Self-Assessment taxpayers are self-employed – they could be a high rate taxpayer or claiming more than £2,500 in expenses.

In these instances they won’t be entitled to claim as wide a range of allowable expenses as someone who is self-employed but they shouldn’t forget key areas such as charitable donations.

Taxpayers should ensure they retain good, accurate records of their outgoings and expenses in order to satisfy HMRC’s requirements.

 Meet deadlines

Failing to meet the deadlines is a common mistake, with nearly three quarters of a million taxpayers facing a penalty after the 2017/18 deadline.

Not only does the Self-Assessment tax return need to be submitted by midnight on January 31, 2020, you also need to make sure that you have settled your tax bill by that deadline as well as made the first payment on account for the current tax year, if this applies to you.

With a penalty of £100 for missing the deadline by just a day and interest mounting up on unpaid tax, it could be a costly mistake.

Keep an eye out for small mistakes which can have large costs.

Each year, some taxpayers make silly little mistakes like forgetting to actually submit their tax return, even though they’ve completed it, or getting their UTR and National Insurance numbers incorrect and these can all have much bigger consequences, such as penalties and fines for unpaid taxes.

Just taking five to ten minutes once you have completed it to make sure that your personal details are correct, that you haven’t mistyped any of the income or expenses figures, is invaluable – as is making sure that you have actually submitted it and that you have an acknowledgement to show that to be the case.