Five Self-Assessment Tax Return Mistakes to Avoid

When it comes to filing a self-assessment tax return, precision reigns supreme. Even little errors, such as typos, can be costly if they result in improper tax payment.

To save you time and money by avoiding HMRC fines, we've compiled a list of the five most common tax return mistakes to avoid.

It makes no difference whether you have previously filed a Self Assessment tax return or this is your first time. These are common blunders that are simple to miss and forget.

Simple grammatical errors

A typo is one of the most common errors that anyone may commit. A minor error may seem little, but it can cause major problems when it comes to filing your tax return.

When you add an extra decimal place here, it can be harder to notice the erroneous digit there. The issue is that entering inaccurate amounts will result in incorrect income calculations.

If you inadvertently exaggerate your income, you may face a substantially higher tax payment than you anticipated.

If you understate your profits as a self-employed person, HMRC may come knocking on your door accusing you of underpaying tax.

That's why it's critical to perform bank reconciliations on a frequent basis to confirm that your transactions match those in your accounting software. This procedure aids in the detection of any missing or incorrect transactions that may cause your income or cost amounts to be skewed at the end of the year.

Failure to report pension contributions

If you contributed to a pension during the tax year you're filing for, you'll need to include that information on your return. There will be a section for you to fill out about pension contributions. HMRC's website has more information on tax on private pension contributions.

It's critical to get this right because claiming you've contributed too little could result in you losing tax relief. HMRC may assess interest on any underpayment if you overestimate your donations.

Making a claim for unallowable charges

It's tempting to attempt to claim as much as you can to lower your tax burden, but tread carefully. Some things, such as vacations or a new television, will be impossible to claim. There are, however, some grey areas to be aware of.

Many business owners make the mistake of assuming that certain expenses are allowed for everyone. There will be certain expenses that are relevant to your business, but others will not.

Claiming for fuel is a good example. Businesses that must travel frequently may be able to claim fuel and travel expenses. A home-based firm that does not require travel will almost certainly be unable to claim travel expenses. This is due to the fact that travel isn't a required aspect of your business. You can find more examples in this list of common business expenses.

If you're ever confused about what expenses you can deduct, consider whether they're necessary or only for the purpose of conducting business. If you're still unsure, consult an accountant for more complicated situations like how much of your home can be claimed as an office expense.

Interest is not included.

You must also specify how much interest you received from bank or savings accounts, in addition to company revenue.

Interest from peer-to-peer lending, credit unions, and dividend income are also included. Interest from ISA accounts is not included because it is tax-free.

Failure to report all income

HMRC needs a complete accounting of all of your earnings. That means you must declare all of your income, including wages, benefits, pensions, rental income, dividends, and capital gains.

If you do not declare all of your income, you risk facing severe fines because you will be avoiding paying taxes on it.

What happens if you make a blunder?

Don't panic if you realise you've made a mistake on your tax return. You normally have a year to remedy your error. If you file your taxes online, you can simply make adjustments by editing your tax return and resubmitting it.

If it's been more than 12 months since you last filed, you'll need to get in touch with HMRC directly. You can do this in writing by stating the tax year in question, the reason you believe you paid too much or too little tax, and the amount you believe you owe. If you overpaid, you may be eligible for a refund up to four years later.

Having an accountant work with you is the greatest way to avoid making costly mistakes in the first place. For example, Accounting Firms a London accounting business, specialises in assisting entrepreneurs and startups in ensuring that they pay only the necessary amount of tax.