The 9 biggest self-assessment mistakes (and how to avoid them)
Being self-employed can be one of the most rewarding things a skilled worker can do. No matter what industry you’re in, if you can maintain a strong reputation and keep on top of your finances, you’ll be setting yourself up for success, a healthy influx of new business, and limitless opportunities.
However, with that extra freedom comes the added responsibility of submitting a comprehensive and accurate SATR (or Self Assessment Tax Return). And if you’re not submitting a self-assessment that’s on time, on point, and free of any mistakes, then you open yourself up to incurring fines, warnings, and even legal action from HMRC.
So, how can you steer clear of any wrongdoing and make sure what you’ve submitted is as accurate and informative as possible? If you’re able to avoid these 9 common mistakes, you can avoid any future problems, keep your tax affairs in order, and ensure that you’ve submitted the best self-assessment forms possible.
1. Losing sight of important deadlines
Anyone who is listed as self-employed is legally required to submit an annual tax return. Directors of limited companies are also required to do the same. You’ll also need to have your UTR (Unique Taxpayer Reference) number to hand, which should have been sent to you when you first registered for a self-assessment tax return.
You’ll need to submit your tax returns by the following deadlines:
- 31st of October if you’re submitting a paper tax return
- 31st of January if you’re submitting an online tax return
2. Getting your tax code wrong
Being in the wrong tax code is more common than you might think. And while it may happen to a lot of people, having the correct tax codes is essential. Paying too much tax (or too little) can complicate your tax year and lead to issues in the future.
If you think you may have an incorrect tax code, you can always contact HMRC and discuss the matter with them before making this error in your self-assessment. It’s better to solve this as soon as you notice it, instead of hoping it’ll get resolved on its own.
3. Miscalculating your figures
If you don’t calculate your figures accurately then you’re already setting yourself up for a difficult self-assessment. To avoid this, it’s always a good idea to triple-check your calculations. Paying the right amount of tax is pivotal, and there can be hefty penalties and even prosecutions for people who are caught miscalculating figures on purpose.
However, spotting an error after filing a tax return isn’t the end of the world, as long as you correct it as soon as possible. In fact, you’ll have 3 days to make changes to your self-assessment after filing it. For changes after this 72-hour period, you’ll have to write to HMRC directly and plead your case.
4. Claiming expenses that cannot be deducted
Even if done accidentally and without malice, making an incorrect claim can lead to costly penalties and legal ramifications for people conducting a self-assessment. If you have any doubts whatsoever about the validity of an expense claim you’re making, it’s vital that you check with a professional accountant before making a potentially huge error.
One of the worst mistakes you can make is to automatically assume that something you’re claiming qualifies under the guidelines of what constitutes self-assessment expenses. Always be certain of what you can and cannot claim before attempting to conduct a self-assessment.
5. Failing to include supporting evidence
Sometimes, conducting an in-depth self-assessment will require additional pages of information. This is done to properly log any additional income that a standard tax return hasn’t covered.
You’ll be required to provide supporting documentation for the following things:
- Income from property
- Any loss relief claims
- Employment deductions
- Any income gained from shares schemes
- Taxable sums from overseas pensions
- Foreign income that’s not UK taxable
The above list isn’t exhaustive, as differing situations can require different amounts of supporting evidence. If in doubt, it’s always best to check and include more information needed than not enough.
6. Poor record keeping
Poorly maintained records lead to poorly kept information. In turn, this leads to poorly filled-out self-assessments, and that’s where you open the door to potential issues like omissions of income and failing to declare Capital Gains. And with those omissions comes the very real risk of legal prosecution from the HMRC.
But what are the potential sources of income or Capital Gains that you’re legally required to declare? Below are the most common types of income in need of being listed on your self-assessment.
- All pensions income
- Any employment income
- Any maternity or paternity pay
- Jobseekers allowance and sick pay
- Interest obtained through savings, investments, and bank accounts
- Capital Gains
- Employee shares initiatives
- Property income
- Foreign Income
7. Ticking the wrong boxes
HMRC try to make the process as easy as possible by including an instructional guide for your self-assessment needs. It’s a comprehensive guide that helps to take you through each step of the processes and forms.
But even with this guide to assist them, many people still make the mistake of scanning the form and assuming that they know what’s needed. They then proceed to rush ahead and make simple mistakes like ticking the wrong box and completely rendering the information invalid, or inaccurate.
8. Failing to sign and date a paper tax return
Despite much of HMRC becoming digitalised for the benefit of everyone, paper tax returns are still perfectly viable options for your self-assessment. But if you are using a paper form, it’s important to remember that your paper tax returns absolutely cannot be submitted without the following:
- Your self-assessment MUST be signed by you
- Your self-assessment MUST be dated before sending it in
- Your self-assessment signature MUST NOT be a photocopy
It’s an easy mistake to make when you’re putting together a comprehensive list and focusing on so many numbers, dates, and details. However, it’s also a costly mistake, so avoid it at all costs and make sure you’ve put a signature on it before sending it off.
9. Providing vague or unfinished information
While it may sound comical to add this to a list of common self-assessment mistakes, this happens more often than you think. While some assessment forms may not need definitive information to be included, submitting forms to HMRC requires all information to be filled in to the best of your ability, and for all requested parts of a self-assessment to be completed.
By sticking to what’s asked of you, and by providing all of the information requested, you can ensure that your self-assessment is on time, on point, and up to date with the most accurate details possible.