You should have already submitted your Self-Assessment Tax Return, and before the 31 January 2018 deadline. However, if you’re rushing because you haven’t, here are some basic mistakes to avoid which you could easily make in your haste. (And they’re good pointers to remember for next year).
Easy Mistakes to Avoid when Completing your Tax Return
Fear of the £100 penalty: Like we said, you should have been organized and already filed your 31 January return. However, with ‘best laid plans…’ and all that, we know that some of you won’t have.
Rushing your return won’t only cost you the £100 penalty. You could well miss out on claiming valuable tax relief. Or on the flip side, you might miss out on declaring various pots of income which will only catch up with you next time.
Explain unusual variations: HMRC are far less likely to start an enquiry if you explain why there is something unusual about your accounts. Remember that you don’t need to over-share – just give a simple, honest and straightforward account of the circumstances.
Don’t forget that any profit you make on Bitcoins or any other form of cryptocurrency is still a gain, and needs to be included on your return. In fact, if you think you’ve seen an opportunity to make some ‘easy money’, it will always pay you to ask for our advice on the tax implications first.
Are you eligible for rent a room relief, claimable by tax payers with lodgers? It’s now £7500 per year – quite a lot more than the previous £4250.
If you’re a basic rate taxpayer, remember to include your mortgage interest on your tax return. The new rules around mortgage interest relief for higher rate tax payers (applicable from March 2018) don’t include you.
Make sure that the same expense costs are allocated to the same boxes each year, to avoid large variations which will require further explanation.
Make errors on your tax return and you can expect what HMRC call a ‘carelessness penalty’. It can be anything between 15 and 70% of the tax due. You can ask for the penalty to be suspended while you put measures in place to avoid mistakes in the future. You do need to remember to appeal.
Some areas generate more HMRC enquiries than others. Including:
-legal and professional expenses; repairs and renewals; entertaining; stock; provisions and accruals; research and development; drawings; pensions; employment expense; termination payments
Always make it clear to the taxman where you have adjusted figures for private use of items.
Do you have foreign income? You should take extra care (or pay someone to help you). Ticking the unremittable income box doesn’t mean that no tax is due.
Forgetting foreign income was so common that to make the error is now a criminal offence.
Allowable expenses can be a minefield. The rules aren’t as straightforward as you might think, and you should always take advice or proceed with care.
Termination payments should only be claimed once. If an employer has already claimed tax relief at source through the payroll you can’t claim it again on your tax return. If you do you should expect a hefty ‘carelessness fine’, of course.
Don’t forget child benefit or student loan clawback. It’s easy to forget to include these items on your tax return.
You should always check your tax code anyway to make sure that additions or deductions are correct. However, you should also refer to it .when completing your return to ensure that it is correct and complete.
How to Avoid Making Mistakes on your Tax Return
Completing your tax return is not a task to be rushed. If you do complete it yourself, use a checklist. HMRC provide one.
By far and away the easiest, stress-free way to complete your annual self-assessment tax return is to leave it in the capable hands of our team here at Jones Harris Chartered Accountants. Not only will you know that it’s sent in on time, you’ll also know that we’ve utilized all of your available allowances.
Why don’t you get in touch with us for a no-obligation chat?
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