10 common self-assessment tax return mistakes and how to avoid them

If you need to submit a Self-Assessment Tax Return (SATR) it’s imperative you get it in on time and free of any mistakes. There are penalties for not submitting your tax return on time and you may have to pay a fine if HMRC decide that you haven’t taken sufficient care in preparing it.

This article explains how to get started with your tax return, and how to avoid common mistakes that people make on their self assessment tax return.

Tax Return deadlines

Paper tax returns need to be filed with HMRC by 31st October and tax returns submitted online by 31st January. So, if you complete your tax return online, you get a few extra months.

All self-employed people must submit an annual return, as do all limited company directors.

Common tax return errors

There are a number of common tax return mistakes that can hold things up (possibly leading to a penalty), cause you problems, or even prompt HMRC to look more closely into your tax affairs. So it’s best to be aware of them and make sure you don’t make them!

1. Incorrect figures

Double-check any calculations to ensure you pay the correct amount of tax. Any deliberate wrongdoing can result in prosecution.

2. Not declaring all income/Capital Gains

There are severe penalties for failing to declare all relevant income and Capital Gains. For deliberate errors, e.g. omitting a source of income on purpose, you could potentially be prosecuted.

These are the types of income/Capital Gains you need to declare:

• Income from employment
• Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance,
• Pension income
• Interest, dividends from savings, bank accounts, building societies investments or Trusts, etc.
• Property income
• Foreign income including evidence of tax already paid abroad
• Capital gains
• Employee share schemes
• Dividends

Some items can be excluded from your Tax Return income, including:

• Interest or dividends or bonuses from tax-exempt investments (for example, ISAs and National Savings & Investments Savings Certificates)
• Interest and terminal bonuses from Save As You Earn schemes
• Premium Bond, National Lottery and gambling prize winnings
• Interest awarded by a UK court as part of an award of damages for personal injury or death

3. Trying to claim expenses that can’t be claimed

There are complex rules governing which expenses you can deduct, and there are costly penalties for incorrect claims.

If you are in any doubt check with your accountant. It’s far better to check these things carefully – some things you may think can be claimed, can’t. But there are also a few things you may not have thought to claim. To help make sure you are being as tax-efficient as possible, read these guides;

4. Signature & date

If you are submitting a paper return, make sure you sign and date it before you send it in. A photocopy will not suffice. This is a simple mistake, but people do forget to sign their tax returns.

5. National Insurance number and Incorrect Unique Taxpayer Reference (UTR)

Make sure these are correct. The UTR is a ten-digit reference number unique to you that will be on any correspondence you receive from HMRC. It’s important to include these and to get them right.

6. Not enclosing supplementary pages

For additional income not covered by the main tax return, you will need to include supplementary pages. Additional information which may be relevant includes:

• Interest from gilt edged and other UK securities, deeply discounted securities and accrued income profits
• Life insurance gains
• Stock dividends, non-qualifying distributions or close company loans written-off
• Post cessation receipts
• Income from share schemes
• Lump sums or compensation payments from your employer, or foreign earnings not taxable in the UK
• Taxable lump sums from overseas pension schemes
• Certain employment deductions
• A claim to age-related Married Couple’s Allowance
• Other tax reliefs not found in the main part of your tax return
• Loss relief claims
• Income from property

7. Writing things like: “info to follow” or “as per accounts” instead of writing required figures

HMRC does not accept information like this. Include all the information that’s needed where it’s needed and when it is needed. Everything should be submitted together.

8. Ticking wrong boxes

Use the guide HMRC includes with your tax return to help you. It’s very clear and takes you through the process step by step.

9. Missing the deadlines

The deadline for submitting a paper return is 31 October following the end of the tax year.

The deadline for filing your tax return online is 31 January after the end of the tax year. So a tax return for the 2020/21 tax year would need to be submitted online by 31 January 2022.

If you miss the deadline, you will have to pay penalties which increase the longer you delay. You can find more on the self assessment tax deadlines and penalties on this page of the HMRC website.

10. Improper record-keeping

You need to keep proper and complete records. These are the records you need to keep in order to complete your tax return (if they are relevant):

• P60, P45 and P11D
• Expense records
• Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance
• Pension records
• Bank statements
• Property income
• Foreign income including evidence of tax already paid abroad
• Capital gains
• Employee share schemes
• Student loan payments

For the self-employed, you will need to maintain business records such as:

• Cash books
• Invoices
• Mileage records
• Receipts
• Bank statements
• Records of all sales and takings, purchases and expenses
• Money taken out of business for personal use (if any)
• Personal money put in to the business (if any)

What to do if you do make a mistake on your tax return

If you do make a mistake on your tax return you’ve normally got 12 months from the submission deadline to correct it. This is called an ‘amendment’.

For example, for the 2020/21 tax year, you have until 31st January 2022 to file your tax return online. If you subsequently notice that you have made a mistake on this return, you have a further 12 months, which takes you up to 31st January 2023, to correct the error with an amendment.

It’s usually advisable to hire a qualified accountant or tax advisor to help you complete your Self-Assessment Tax Return because they will make sure it is correct.

They will also help you to reduce your tax bill as much as legally possible. Particularly if you have lots of sources or complicated income, an accountant or tax advisor can help make sure your tax affairs are handled properly.