Millions warned of 5 common mistakes made with tax returns you don’t even realise | Personal Finance | Finance
With only two days to go, the 3.8 million people yet to file their tax return are urged to act now or risk facing a £100 penalty.
HM Revenue and Customs (HMRC) is expecting more than 12.1 million tax returns to be filed for the 2022 to 2023 tax year along with any payment that is owed.
To date, more than 8.3 million online returns have already been received. Trusha Shah, tax manager at accountancy firm HW Fisher, has offered advice for those who have not yet filed their returns.
There are common mistakes that people make which could cost them hundreds if they are not careful. Ms Shah said: “The deadline for filing paper tax returns has passed, and so those who are yet to file their self-assessment must do so online – and we recommend they do so as soon as possible.
“Too often individuals leave it too late and make simple, costly mistakes in their haste to complete it on time.”
Do you need to file a tax return?
Britons must submit a tax return if they have self-employed earnings or have received untaxed income over £1,000.
However, it is not just the self-employed who must complete their self-assessment tax returns.
People will also have to file if they have any untaxed income from:
- money from renting out a property, including through Airbnb
- tips and commission
- income from savings, investments and dividends
- foreign income
This list is not exhaustive. If individuals are unsure on whether they need to complete a tax return, they should seek professional advice or contact HMRC directly.
Five common mistakes to avoid
- Give yourself plenty of time: Gathering paperwork takes longer than you think! This includes your P60, which confirms how much tax you have paid. You will also need records of your benefits and expenses, which can be found on your P11D or P9D forms. You will also need a P45 from your previous employer if you left a job in the last tax year.
- You can claim tax relief on pension contributions: Keep records of any pension contributions you make to claim the appropriate tax relief.
- Remember to include charity gift aid payments: You will also need the details of all your gift aid payments – for example, have you sponsored a friend to run for charity? HMRC provides some tax relief on charitable donations, which can be included.
- Always keep a copy of your completed tax return: If you are employed or a pensioner, keep all paperwork for 22 months after the end of the tax year. Self-employed people or landlords should keep all paperwork for five years and ten months.
- Don’t forget to take advantage of your personal savings allowance: This can be applied to interest earned on your savings. The interest you receive on your savings could be tax-free up to £5,000 per year.
Trusha added: “Completing your tax return on time is crucial. If not, you will face a £100 fine, which will increase if your return is more than three months late.
“Especially if you are paying from overseas, we recommend that you allow extra time for processing. For more detailed information on how to complete your return, including how to make your payment and setting up a payment plan, visit HMRC‘s website.”
For anyone unable to pay in full, HMRC wants to help find an affordable way to pay the tax they owe.
They may be able to set up a Time to Pay arrangement and can find out how to do this online, without speaking to HMRC, if they owe less than £30,000.