Filing your Self-Assessment tax return with HMRC can be daunting, especially for the self-employed, freelancers, or those with complex financial arrangements. Even minor errors can result in penalties, missed opportunities for tax relief, or audits by HMRC. By understanding the most common mistakes people make and knowing how to avoid them, you can ensure a smoother and more accurate tax filing process. In this guide, we will explore the common tax mistakes to watch out for and how to avoid them with the help of CANGAF Accountants.

1. Missing the Self-Assessment Deadline

One of the most frequent errors individuals make is missing the filing deadline. For paper tax returns, the deadline is 31st October, and for online returns, it’s 31st January following the end of the tax year.

Failing to meet these deadlines results in an automatic penalty of £100 for late submission, with further penalties accruing the longer you delay.

How to Avoid:

• Mark your calendar with the deadlines for paper and online submissions.
• Aim to complete your tax return well in advance. Starting early gives you time to gather all necessary documents and resolve any queries.
• CANGAF Accountants can help you stay on track by handling your Self-Assessment tax return from start to finish, ensuring you never miss a deadline.

2. Incorrectly Reporting Income

Another common mistake is failing to report all sources of income. If you’re self-employed, income from clients may be clear, but many people forget to declare other forms of income, such as:

• Interest from savings
• Dividends from investments
• Rental income
• Earnings from a side hustle

Failure to declare all income could result in penalties or interest charges.

How to Avoid:

• Keep accurate and detailed records of all income, whether from employment, self-employment, or investments.
• Use accounting software to track your income streams.
• If you’re unsure about what to report, contact CANGAF Accountants for guidance.

3. Overlooking Allowable Expenses

When completing your Self-Assessment, you’re entitled to claim allowable expenses that can reduce your tax liability. Commonly overlooked expenses include:

• Home office costs
• Mileage and travel expenses
• Training and professional development
• Office supplies and equipment

How to Avoid:

• Familiarize yourself with HMRC’s list of allowable expenses.
• Keep receipts and invoices for all business-related purchases.
• Use accounting software or apps to track your expenses throughout the year.
• CANGAF Accountants can help you identify and claim all eligible expenses to reduce your tax bill.

4. Not Claiming Tax Reliefs

Tax reliefs are available for a range of situations, but many people miss out on claiming them. For example:

• Pension contributions may be eligible for tax relief.
• If you work from home, you can claim a home office allowance.
• Marriage Allowance allows eligible couples to transfer part of their personal allowance to reduce their tax bill.

How to Avoid:

• Research and understand which tax reliefs apply to your situation.
• Speak to CANGAF Accountants to ensure you are maximizing your tax relief claims.

5. Errors in Calculating Tax

Even minor miscalculations can lead to significant consequences. Incorrectly calculating your total income, tax due, or allowable expenses can result in overpaying tax or, worse, underpaying and being liable for penalties.

How to Avoid:

• Double-check all calculations before submitting your return.
• Consider using tax software or hiring an accountant to review your return.
• CANGAF Accountants can handle all calculations for you, ensuring accuracy and peace of mind.

6. Failing to Account for Payments on Account

Many taxpayers don’t realize that if their tax bill is more than £1,000, they may be required to make Payments on Account. This means paying an advance towards the following year’s tax liability, usually in two installments: one by 31st January and the other by 31st July.

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How to Avoid:

• Be aware of your tax obligations for Payments on Account, and budget accordingly.
• If your income has dropped significantly, you can apply to reduce Payments on Account with HMRC.
• CANGAF Accountants can help you manage your cash flow and prepare for upcoming payments.

7. Forgetting to Include Gift Aid Donations

Gift Aid allows charities to reclaim 25p for every £1 you donate, and if you’re a higher-rate taxpayer, you can also claim back the difference between the basic rate of tax and your rate. Forgetting to include Gift Aid donations on your tax return can mean missing out on valuable tax relief.

How to Avoid:

• Keep records of all charitable donations made under the Gift Aid scheme.
• Enter these correctly on your tax return to receive the applicable tax relief.
• Consult CANGAF Accountants to ensure that all eligible donations are included.

8. Not Updating HMRC on Changes in Circumstances

Your personal circumstances can affect your tax liability, and failing to update HMRC on significant changes, such as starting a new business, receiving a large inheritance, or moving abroad, can lead to errors in your tax return and potential penalties.

How to Avoid:

• Notify HMRC of any changes in your circumstances as soon as they happen.
• Speak to CANGAF Accountants if you’re unsure how changes in your situation will impact your tax return.

9. Filing Incomplete Returns

Submitting an incomplete tax return can result in delays, fines, and inquiries from HMRC. Missing sections or leaving out critical details will raise red flags during HMRC’s review process.

How to Avoid:

• Review your tax return thoroughly before submission to ensure that all sections are completed accurately.
• Use the services of CANGAF Accountants to ensure a comprehensive and complete return that minimizes the chance of errors.

10. Failing to Keep Proper Records

HMRC requires you to keep records of your income and expenses for at least five years after the tax year, and failure to do so can result in fines and complications during tax audits.

How to Avoid:

• Keep detailed and organized records of your financial transactions, including income, expenses, bank statements, and invoices.
• Use accounting software or hire a bookkeeper to help manage your records.
• CANGAF Accountants offers bookkeeping services that ensure your records are well-maintained and compliant with HMRC regulations.

Conclusion

Filing a Self-Assessment tax return can be complex, but by avoiding these common mistakes, you can reduce the risk of penalties, audits, and lost tax savings. Working with a professional accountant ensures your return is completed accurately and on time, with all available reliefs claimed.

At CANGAF Accountants, we specialize in helping self-employed individuals, freelancers, and small business owners with their Self-Assessment tax returns. Contact us today to ensure you avoid costly mistakes and maximize your tax efficiency.

Contact Details: CANGAF Accountants
235 Tonge Moor Road, Bolton BL2 2HR
Email: info@cangafltd.com
Phone: 01204 859315