5 Common Mistakes People make on their Self Assessment Tax Return
It’s January; the post-Christmas and New Year’s blues may have started setting in and you try to focus on getting back into work mode which may be difficult enough. On top of that though, you remember your self assessment tax return is due in just a few weeks’ time. Whether you’re the type that quickly forces yourself to get it done and out of the way so that you can forget about it, or procrastinates until it’s right up to the deadline and panic file, make sure you don’t find yourself in even more stress with fines or investigations by avoiding these 5 common mistakes for tax return.
1. Not declaring all sources of income.
We know the tax return form seems never ending with its multitude of questions and tick boxes, as well as all the optional additional sections, but it’s important that you tackle each part systematically and calmly to ensure you don’t miss anything out. Whether you’re a limited company contractor or a sole trader freelancer, if you receive any extra finances you must include this in the relevant areas. Supplementary income can include rental income, married couples’ allowance, interest, securities and accrued income profits, life insurance gains and stock dividends, bonus issues of securities and redeemable shares. There are other sources of supplementary income so always speak to an accountant if you’re not sure.
2. Only using estimates and round numbers instead of the accurate figures.
This is one thing that the taxman will spot quickly and easily. By doing this, you raise suspicions that you are not keeping proper records of your expenditure and income which means the taxman is more than likely to ask for evidence. This may also allow him to open up an investigation against your tax return which is stressful and costly. To find out more about tax investigations, why they are on the increase and how you can protect yourself, see our tax investigation protection policy page.
3. Claiming for expenses that can’t be claimed.
As accountants, we’re the experts on getting this part right. We understand that no one wants to pay more tax than they have to, and we make sure we deduct every allowable expense when completing your tax return for you. However, if you are completing your own, proceed with caution. You may be tempted to claim for the costs of Christmas cards you’ve sent to all your clients or customers but there are strict rules on this. Make sure that for every expenditure you are able to prove it was “wholly and exclusively for the purpose of trade” in order to avoid the taxman asking questions. Areas where he is most likely to delve in deeper include legal and professional expenses, repairs and renewals, entertaining, stock, and more. However, for expenses which can be claimed back on, take a look at our free advice on 5 ways to reduce your self assessment tax bill.
4. Forgetting to add Class 2 NIC to the tax bill.
This is a new requirement so remember to include it on your return if you are required to pay it or have opted-in to pay it. There are still discussions ongoing regarding changes to Class 2 NIC, but for the 2017 financial year this will still apply to your tax return.
5. Missing the deadline.
This is the obvious one and it’s easy enough for us to say “don’t do it!” but too many times people underestimate the work and preparation required in order to complete their tax return. One way to avoid it is to keep well-organised records throughout the year which will make things much easier for you come January. The other way is to start as early as possible. With Christmas and New Year taking up most of people’s time we know your tax return may be the last thing on your mind in December.
If you have left it to the very last minute – don’t worry. Give us a call. We can complete your tax return within 48 hours of receiving all necessary information so you can relax and leave it to us.
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