As accountants that specialize in tax returns we see these self assessment mistakes over and over again. Self assessments is already stressful enough as it is. But let’s just look over 10 of the biggest mistakes people make when they are filing their personal tax returns.
These are all avoidable mistakes if you know your way around the tax legislation, and if you don’t know your tax legislation, CIGMA Accounting is here to lend a helping hand.
Forgetting about tax-free allowances
The HMRC is quite generous with their tax free allowances. It is just about you having to know what they are to take advantage of them!
- Marriage Allowance (Lets you transfer £1,260)
- Personal Savings Allowance (May get up to £1,000 of interest)
- Dividend Allowance (Up to £2,000)
- Blind Person Allowance (Personal tax allowance increased to £2,600)
- Trading & Property Allowance (Up to £1,000)
- Maintenance payments (10% of the maintenance you pay )
Not declaring the correct salary and Benefits for PAYE
If you are permanently employed and have a PAYE job, it’s important that you are aware of your benefits and expenses. Your company should provide you with a P11D which has a breakdown of all your benefits and expenses to the company. You need to ensure that this information is declared in your tax returns.
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Claiming ineligible expenses
There are many things that you can claim for, but there are also many things that you cannot claim for. There are different categories for different individuals, these are split into three basic categories:
Private Tax Relief
- Pension Contributions
- Charity Donations
- Maintenance Payments
- Time spent working on a ship outside of the UK
Sole Traders / self employed
- Office, property and equipment
- Car, van and travel expenses
- Clothing Expenses
- Staff Expenses
- Reselling goods
- Legal and Financial costs
- Marketing, entertainment and subscriptions
- Training Courses
paye individuals
- Working from home
- Uniforms, work clothing and tools
- Vehicles you use for work
- Professional fees and Subscriptions
- Travel and Overnight expenses
- Buying other equipment
We laid all of these expenses out in detail so you can have a look at what you can claim for, and what you cannot claim for:
Save On Taxes: Exemptions in the UK
Remember that if you have multiple income streams, you can claim for tax relief in multiple categories if applicable.
Using the wrong tax code
Your tax code is used by your employer to determine how much income tax to take from your pension or your pay (Note that if you are a sole trader, you will not have a tax code, as a sole trader you will have a 10 digit Unique Tax Number).
If you are using the wrong tax code, you could be paying more tax than you should. If you are wondering what your tax code means, you can visit the HMRC website to get a detailed explanation of what the numbers and letters in your tax code means.
However, if you are self-employed and employed on either a full-time or part-time basis, or have a pension, you’ll have tax codes for them.
not declaring all income
It’s important that you declare any income that you currently receive. Make sure that you declare:
- PAYE Salary
- Sole Trader Income
- Foreign Income
- Rental Income
- Investments such as SEIS/EIS
- Capital gains (properties, crypto,stocks and shares)
- Interest income
- Dividends
If you have left a job during a tax year you need to add both jobs in the tax returns (P60 when you stay with the company & P45, when you leave your company during the tax year).
If you are declaring multiple forms of income, ensure that you go through the tax-free allowances of each, as well as which expenses you can claim back for each form of income.
Not adding supplementary pages
Leading from the previous mistake, many people forget to download and fill in the supplementary pages for their self assessments. Here is a detailed list of the supplementary documents that you may have to fill in (based on the information you have already supplied in your self assessment.
human error
As with many other things in life, Self Assessments are not immune to human error! That is why you need to double check your self assessment to ensure that you have not made any glaring mistakes like:
- Calculation errors
- Ticking the wrong boxes
- Leaving boxes unticked that needs to be ticked
Submitting self assessment when you don’t have to
If you’re wondering whether you should be submitting a self assessment we’ve compiled a blog post talking about exactly who needs to submit tax returns. This blog post is summarised in the image below:
missing deadline for submission
Missing the deadlines will inevitably lead to penalties from the HMRC. How do the penalties work?
30 days — you’ll have to pay 5% of the tax you owe at that date
- 6 months — you’ll have to pay a further penalty of 5% of the tax you owe at that date
- 12 months — you’ll have to pay a further penalty of 5% of the tax you owe at that date
Failing to plan for your tax account accordingly
Failing to plan adequately for your tax returns could result in you having to work out a payment plan with the HMRC. However, the Making Tax Digital (MDT) initiative will assist individuals by allowing them to see how much tax they owe in real-time.
The good news is that you don’t have to do this alone! If you are in need of some assistance, we’ll be happy to help you at CIGMA accounting! We’re an boutique accountancy firm in London, UK that specializes in Tax returns. We’re a small, but growing company looking to make tax returns stress free and efficient all over the UK.
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