5 Costly Mistakes to Avoid in Your Self Assessment Tax Return

The Self Assessment season is here! Due to the holiday season and the new year, people may put off preparing for the Self Assessment Tax Return. However, preparing before the deadline can help you avoid some common errors and mistakes. These errors can often be overlooked but can result in hefty fines, penalties, and unnecessary complications.

So, we have prepared a list of 5 common errors to avoid in your upcoming Self Assessment Tax Return.

What Are the Common Mistakes When Filing Self Assessment Tax Return?

The deadline for the online Self Assessment Tax Return is 31 January of every year. You prepare the tax return for the previous tax year and disclose all your income, gains, losses, investments, and more in this tax return statement. For example, you must submit the Self Assessment Tax Return for the tax year 2023/24 by 31 January 2025.

You can also submit the tax return by post, which is a paper return. However, the deadline for that was 31 October, which is no longer applicable for this year. So, if you have not submitted your Self Assessment Tax Return yet, an online return is your only option.

Here are the common mistakes you can avoid when filing the Self Assessment Tax Return.

1. Missing the Deadline

Missing the 31 January deadline for Self-Assessment Tax Returns is one of the most obvious and common mistakes made by UK taxpayers. According to reports by the UK government, a whopping £1.1 million taxpayers missed the deadline in January 2024.

Just missing the deadline day triggers a £100 fine. This fine alone helps the government collect a lot of revenue due to the number of people who miss the deadline. You can set reminders beforehand and prepare the tax return in advance to avoid this mistake.

2. Not Declaring All Income

Self Assessment is a medium for the UK government to inspect all the sources of income of the taxpayers. This helps the government to avoid and monitor any tax evasions. So, missing out on declaring all the sources of income can be a major error. You have to declare income from sources such as rental properties, offshore companies, freelance work, or other investments.

Keep records of all bank statements, invoices, and other statements to track your income sources throughout the year.

3. Incorrect Personal Details

Another common mistake is making a mistake in your personal details, such as your National Insurance (NI) number, Unique Taxpayer Reference (UTR) number, address, and more. Miscalculations can lead to penalties, rejection, or even paying more tax.

So, please verify your details and ensure they match with HMRC’s records to avoid this issue.

4. Not Reporting Capital Gains

Capital Gains Tax (CGT) is paid on the chargeable gains made from selling property, land, or other assets. CGT is paid within 60 days of disposal of an asset. Therefore, people often forget to declare these capital gains on their Self Assessment Tax Returns. However, this can be a critical error resulting in penalties.

You can get advice from a professional to avoid making such mistakes.

5. Not Claiming All Allowable Expenses

Allowable expenses are running costs that self-employed individuals can deduct to calculate the profit and only pay tax based on that profit. You can deduct costs such as office expenses, travel expenses, financial costs such as insurance and bank charges, and many more.

Not claiming all the allowable expenses can lead you to pay more taxes than necessary. So, you can keep records of all your expenses and refer to HMRC’s guidelines to avoid this mistake.

Conclusion

By avoiding these common pitfalls, you can ensure a smoother Self-Assessment Tax Return process and save yourself from unnecessary stress, fines, or overpaying taxes. Remember, preparation is key, so organise your records and double-check your details. A little extra care now can go a long way in making tax season less taxing!

If you need any assistance in preparing your Self-Assessment Tax Return, our team of professionals can help!