5 Common Mistakes to Avoid When Filing a Self-Assessment Tax Return
As a small business owner, filing your Self-Assessment Tax Return can feel daunting, especially if you’re not familiar with the process. Whether it’s your first time submitting a tax return or you have more experience, this guide will walk you through the most common mistakes and how to avoid them:
1. Reporting Your Income Incorrectly
One of the biggest pitfalls in filing your Self-Assessment Tax Return is failing to report all sources of income. It’s easy to forget about income from freelance work, rental properties, or even the interest you’ve earned throughout the year. Recently, HMRC has stepped up efforts to catch unpaid taxes from side hustles, such as selling items on platforms like eBay, Amazon, and Etsy. Remember, any earnings over £1,000 annually need to be declared and taxed along with your other income.
To steer clear of income reporting errors, it’s wise to use robust record-keeping software. These can help streamline your financial management. Always double- check your income against bank statements, invoices, and any other official
documents to ensure everything matches up.
2. Misunderstanding Allowances and Deductions
Another frequent mistake in a Self-Assessment Tax Return is not fully understanding tax allowances and deductions. This can result in either missing out on potential savings or over-claiming, which could lead to penalties if discrepancies are found. It’s essential to familiarize yourself with HMRC’s guidelines on deductible expenses and figure out which tax reliefs you’re eligible for. If you’re self-employed, you can claim various expenses, such as:
– Office, property, and equipment costs
– Business-related car, van, and travel expenses
– Uniform expenses
– Staff costs
– Costs related to reselling goods
– Legal and financial fees
– Marketing, entertainment, and subscriptions
– Training courses
If you’re unsure about what you can claim, check the HMRC website for a comprehensive list of eligible expenses.
3. Providing Inaccurate Financial Details
Getting your financial details wrong, such as bank account numbers or financial figures, can disrupt the payment process. Mistakes here might lead to delays in receiving refunds or unexpected tax bills from HMRC. To avoid these issues, always double-check the information you enter. It’s easy to make mistakes, especially when entering data manually. Accounting software can help reduce human error and speed up the process, making filing less tedious. For instance, accidentally entering incorrect bank details due to fatigue or oversight can cause significant delays in your tax affairs.
4. Missing Important Deadlines
Missing deadlines is another common error in filing a Self-Assessment Tax Return, with over 1.1 million taxpayers missing the deadline in 2024 alone. Failing to submit on time can result in hefty penalties, which can strain your finances and add unnecessary stress.
To prevent this, it’s crucial to plan ahead and be mindful of the deadlines. Gather all your documents well in advance, and aim to file your return early to avoid last-minute pressure. Whenever possible, file online to avoid delays associated with postal submissions.
As a reminder, here are the key deadlines:
– Online Self Assessment: January 31st
– Paper Self Assessment: October 31st
If you’re a trustee of a registered pension scheme or a non-resident company, the paper deadline is also January 31st.
5. Not Seeking Professional Help When Needed
Attempting to navigate complex tax matters on your own can lead to costly mistakes and unnecessary stress, distracting you from the important aspects of running your business.
While there are plenty of online resources available, there’s no substitute for the expertise of an expert chartered accountant.
Whilst you’ll have to consider the costs for the accountancy fees, having the expertise of an accountant alongside you can actually help you save money on your tax bill, either through identifying unclaimed expenses or avoiding penalty payments.
About the Author:
Name: Lucy Thomas
Bio: Lucy Thomas (MAAT FCCA), Partner at Linggard and Thomas Accountants. Lucy is a chartered accountant working with a diverse client base across a number of different industries, she is specialised in assisting SME’s and owner managed businesses.
Social Media Links:
