If you are self-employed, have a side income, or work off of another job you will probably be required to submit a Self-Assessment Tax Return. Although that sounds pretty easy, there is an ample amount of pitfalls that may lead one to mistakes, penalties, and even HMRC investigations. Starting from reporting errors up to the missed allowances, these errors while making the Self-Assessment Tax Return can prove costly and stressful.
Learn common errors when preparing Self Assessment Tax Returns and know how a reliable partner like MeticMinds could help you avoid them to make sure that your tax returns are submitted right and on time.
Common Mistakes to Avoid While Filing Your Self-assessment Tax Return
It begins with missed allowances to misreporting income. Here are some of the common mistakes made in filing Self-Assessment Tax Returns, and how you could avoid them.
Did you know that more than 1.5 million taxpayers fail to submit their Self-Assessment at the deadline each year, resulting in unnecessary penalty charges? (Source: HMRC).
Mistake #1: Entering Incorrect UTR or National Insurance Number
Your Unique Taxpayer Reference (UTR) and National Insurance (NI) numbers are identifiers. If you get them wrong, then your return will be delayed in processing. In fact, according to HMRC, over 10% of Self-Assessment returns are delayed annually solely on account of identification errors. So check your numbers, particularly your UTR and NI numbers, to avoid that common error.
Mistake #2: Non-Disclosure of Pension Contributions
Failing to disclose your pension contributions could mean you’re losing out on tax relief, especially if you’re a higher-rate taxpayer. In the UK, every person is allowed to claim relief on contributions made to a registered pension scheme up to a maximum of £60,000, this can add up to very huge savings (Source: Gov.uk). This should, therefore, be included to reduce taxable income and eventually the overall tax liability.
Mistake #3: Failure to Declare All Sources of Income
Income should be declared whether it is earned through freelancing, rental income, or any other source. HMRC’s crackdown on undeclared income gathered more than £200 million in fines last year only (Source: Accountancy Today). Forgetting even small income sources could lead to penalties. Keep all of your sources of income registered in detail and if unsure seek Tax Outsourcing Services so no source of income is missed.
Mistake #4: Claiming Non-Allowable Expenses
Claiming ineligible expenses, such as personal entertainment or non-business travel, could lead to fines. HMRC is confined to strict rules of what can be claimed as a business expense. For example, only business-related meals and travel can be deducted. According to HMRC, one of the most prevalent causes for rejected returns is because of a wrong claim of expenses. Partnering with professional Tax Outsourcing Services can help you ensure that only allowable expenses are claimed.
Mistake #5: Missing Out on Tax-Free Allowances
Did you know that the UK offers various tax-free allowances, like the personal savings allowance and the dividend allowance, that can significantly reduce your tax bill? These allowances are often missed by filers, which means paying more tax than necessary. The personal savings allowance, for example, allows you to earn up to £1,000 in savings interest without paying tax on it. Understanding and applying these allowances can save you hundreds of pounds, so seeking consultation from experts in Accounting Outsourcing Services will help a lot.
Mistake #6: Missing the Filing Deadline
The Self-Assessment Tax Return deadline for paper submissions is October 31, while online returns are due by January 31 of the following year. Missing these deadlines can lead to immediate fines, which only increase the longer you delay. Set reminders well in advance, or even better opt for Tax Outsourcing Services so that you do not miss making your return on time and incur penalties.
Mistake #7: Incorrect Reporting of Dividend and Investment Income
All income from dividends and investments above certain thresholds must be reported. For example, if your dividend income exceeds £2,000, it becomes taxable, with rates ranging from 8.75% to 39.35% depending on your income tax band. Misreporting such income could lead to further scrutiny from HMRC, so it’s best to work with Accounting Outsourcing Services to get it right.
Mistake #8: Incorrect Tax Code Usage
Your tax code reflects your personal allowance and any other relevant deductions you qualify for. An incorrect tax code can lead to underpayment or overpayment at times, particularly when changes occur. If in doubt, confirm your tax code with HMRC or work with experts who can confirm your tax code on your Self-Assessment Tax Returns.
Mistake #9: Incomplete Submissions
Submitting incomplete information is a common yet costly mistake. A missed piece of information will delay processing your return, because HMRC may contact you for additional information. An incomplete submission can be as simple as missing employment or self-employment details. Collect all the necessary documentation and take the Tax Outsourcing Services to ensure that your return is fully completed.
Mistake #10: Using Estimated Figures
Estimated figures can lead to inaccuracies that may raise red flags with HMRC, which checks its algorithms to identify unusual submissions. Keep organized records, and always submit precise figures. If you forget to gather some of the information required, Tax Outsourcing Services experts can help you identify some of the closest possible figures available.
Mistake #11: Neglecting Capital Gains Tax Obligations
If you’ve sold property or assets, you may need to report Capital Gains Tax. The UK annual allowance for capital gains is £6,000 (for individuals) as of the 2023-24 tax year, after which you’ll be taxed on gains. Failing to report gains exceeding this threshold can lead to penalties. Keep a record of all capital sales, and if you’re unsure, Accounting Outsourcing Services can help confirm your capital gains reported accurately.
When is The Deadline for The Self-Assessment?
To avoid penalties, it’s crucial to know the Self-Assessment Tax Return deadlines
| Return Type | Due Date |
|---|---|
| Paper Returns | Due by October 31 following the tax year’s end |
| Online Returns | Due by January 31 of the following year |
Tax payments due are also payable by 31 January, with an additional “payment on account” for the following tax year. Missing deadlines could lead to penalties starting at £100, plus interest on unpaid amounts, so getting it in on time is key. Accounting Outsourcing Services can keep you up to date about deadlines and prevent missed submissions
Why Choose MeticMinds for Filing Tax Returns
MeticMinds provides customized Tax Outsourcing Services in which your Self-Assessment filing process is made easy. With years of experience with the UK tax norms, MeticMinds ensures that your Self-Assessment Tax Returns are prepared error-free and submitted within time.
Opting for MeticMinds means fewer worries about tax season. Our team of experts keeps in touch with everything HMRC asks for, helping you avoid common mistakes like incorrect codes, missed allowances, or misreported income. You will find the support that you need for the filing of tax returns professionally and totally in full compliance with HMRC through your association with MeticMinds.
Conclusion
Filing self-assessment tax returns can be a real pain, but eliminating simple errors, for example, on UTR numbers, missing deadlines, and allowances can make all the difference. All it takes is just a little time, accuracy, and professional help to avoid penalties, optimize tax returns, and of course, save money. In case you are not sure of any part of the filing process, do not forget you can seek expert help.
With MeticMinds, you get more than tax filing; you get peace of mind. Their expertise, knowledge of UK tax regulations, and dedication to helping clients maximize their tax benefits make them the best partners for tax return preparation.