A Self Assessment tax return is a system for Her Majesty’s Revenue and Customs (HMRC) to collect Income Tax, and is used by millions. With this year’s deadline occurring on Sunday, January 31, 2021 at midnight, Britons will need to take action. However, Self Assessment can often be a complex process for some, and avoiding mistakes is key.
Express.co.uk spoke to Mike Parkes, Technical Director at GoSimpleTax ahead of tomorrow’s all-important deadline.
He provided further insight into the mistakes often made by Britons when it comes to the form, and how these can be avoided.
Mr Parkes explained: “With a table full of receipts and invoices, and numbers coming out of your ears, it’s very easy to make mistakes while filling out a Self Assessment tax return.
“The good news is, you’re not alone, and if you realise you’ve made an error, you have up until the filing deadline of the year after to make any changes.
For those who are late on filing, an automatic penalty of £100 is issued, but this could rise as time goes on.
Mr Parkes explained for those who are three months late, a daily penalty of £10 is applied, capped at 90 days.
Being six months late has an associated fine of £300 or five percent of the tax owed, if this is greater, and after 12 months, another penalty of £300 or five percent is due.
In exceptional circumstances, 100 percent of the tax due can be charged as a penalty, and so it is clear this is a particularly important issue to consider.
Another mistake when it comes to Self Assessment is a failure to keep records, as well as issues with accuracy.
Mr Parkes added: “It’s imperative that you keep all relevant documentation, so you can provide the most accurate information about untaxed income and expenses relating to those earnings.
“These include expenses records, benefits, bank statements, property income, Capital Gains and P60/P45/P11D.
“When it comes to Self Assessment, it’s all about being accurate.
“Make sure you declare everything, in full, such as income from employment, Capital Gains, dividends and employee share schemes.
“Check and check again, all calculations have to be exact, so be armed with a calculator.”
Mr Parkes also recommended Britons use guides to Self Assessment which are issued by HMRC.
This is because even small mistakes such as ticking the wrong boxes on the form can have a significant impact.
However, taking one’s time with the form as much as possible and truly understanding it is also important.
Mr Parkes concluded: “Remember, you have 12 months’ grace from HMRC, so if you make a mistake, don’t panic.
“Although careless and deliberate errors can be penalised, HMRC will recalculate the tax you owe. But, whatever you do, don’t ignore it!”
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