First of all, Self Assessment errors can result in you missing the deadline. If this occurs, HM Revenue & Customs (HMRC) may fine you too. If your return is wrong the first time around, you will also need to spend some time doing this again.
As a UK taxpayer, if you are both:
-you need to file your personal Self Assessment (SA) Tax Return with HMRC by 31 January next year.
As part of filing your personal tax return you may also be required to make payments on account. If you have a good contractor accountant they will help guide you with regards to this.
What to consider
If you need to file a UK tax return, this will be an annual task. The tax year covers 6 April to the next 5 April. What’s more, you need to file this with HMRC by the following 31 January after the 5 April.
Sad as it is, many people always leave this until the last minute. As a result, this is where Self Assessment tax errors can quite easily pop up if you do not prepare yourself.
The best practice is to file your personal tax return early each year. I would advise that you check through this from start to finish once it is complete. You then have peace of mind with the knowledge that you are fulfilling your duties correctly and on time.
What’s more,Self Assessment errors can often arise if you do not check your tax return. There are some most common reasons for such errors, and I show these below.
The types of errors
If you miss the filing deadline
One of the most common Self Assessment errors is missing the deadline and this is quite common. It is also more likely to occur if you leave this until close to the filing deadline. Many accountants and tax experts are put under pressure by their clients who send them their tax return info at the very last minute. It may then become clear when you prepare your return that you have not included some info or something else is incomplete. In turn, this could lead to you not being able to file your return on time.
If you file the return yourself via the HMRC website, please do not forget to save your return as you go along. Please make sure you also save it after you complete all of the questions. What’s more, please also make sure the return is sent online via their site, and they confirm the receipt of this to you.
Report your income incorrectly
Whoever prepares your return, you or your accountant, please make sure that you double-check that the figures are correct. This is another one of those Self Assessment errors and you need to make sure that you include all of the figures for your income and reliefs. Income is typically salary and dividends and any other income and possibly payments under Gift Aid and personal pension payments. If your accountant prepares your return on your behalf, please make sure that you check the details are correct before you sign this off.
Failure to declare all of your income
You need to make sure that you include all of your taxable income on your tax return. Your income will include both income or capital gains. Certain types of income that you may receive are not taxable. These include ISAs, UK Government Gilts, Premium Bonds, Betting winnings, and Lottery winnings.
You forget to sign and date your return
You may be one of the few that still send your return in through the post by 31 October. This date is three months earlier than the online filing deadline of 31 January. If you do this, please make sure that you sign and date the declaration before you send this to HMRC!
You forget to include supplementary pages
Another one of those Self Assessment errors is overlooking to include supplementary pages with your return. If you have other income, you may need to submit extra pages with your return. These extra pages will include:
- Interest from gilt-edged and other UK securities
- Tax reliefs from investments in Venture Capital Trust schemes or EIS (Enterprise Investment Scheme)
- Life insurance gains
- Share schemes
- Employment lump sums or any compensation payments from a previous employer
- Stock dividends, non-qualifying distributions, and loans that you write off
Wrong tax references
UTR stands for Unique Tax Reference. If you include an incorrect NI number or SA UTR on your tax return, this would, in turn, void this when you submit it.
You will receive your NI number when you begin work. Your NI number will also show on any previous payslips and tax documents that you receive from HMRC
You SA UTR will show on last year’s tax return. It will also show on SA correspondence from HMRC.
You need to make sure that you keep records of your income and any reliefs safe throughout the tax year.
To help avoid Self Assessment errors, you should keep in a safe place details of your:
- salary -this is shown on form P60 or form P45 as well as your payslips
- dividends -from your own company and any others. Any dividends from other companies should show on dividend vouchers that they will send to you
- benefits in kind -these will show on form P11D. Benefits will include company car benefits, medical insurance, beneficial loan, and others
- bank interest on personal bank accounts. It does not include ISAs
- pension income -state pension or personal pension(s)
- government benefits such as universal credit, employment and support allowance (ESA) and income support
- rental property details -the total of both your rental income and any expenses
- Capital Gains Tax transactions and notes on whether you can claim for Entrepreneur’s Relief where appropriate
- any payments under Gift Aid
- the details of any personal pension payments
- the details of any student loan payments
- any details with regards to child benefit received -you will receive thirteen four weekly payments each year if you receive this
- details of any payments into an employee share scheme
- details of any payments under EIS or Capital Venture schemes
HMRC charge penalties for late or inaccurate tax returns. Therefore, it is key to make sure that you get this right!!
Self Assessment tax errors can occur if you or your accountant are not careful when you complete your return. Please make sure that you give this a good look over before you send it in.
Link to Contractor Advice UK group on LinkedIn https://www.linkedin.com/groups/4660081/