Avoid common tax self assessment errors, ICAEW warns
People completing their self assessment tax returns should be careful to avoid common mistakes, chartered accountancy body ICAEW has warned.
ICAEW has issued the warning in advance of the self assessment deadline at the end of the month. The mistakes are based on the experiences of its chartered accountant members.
Common mistakes include:
- Claiming tax on pension contributions above the annual allowance: Taxpayers who have exceeded their annual private pension contributions allowance, usually £40,000 for 2018/19, who don’t have sufficient unused annual allowance brought forward to cover the excess, must declare this on their self assessment tax return, even if the scheme is paying the tax charge.
- Failing to report the high income child benefit tax charge: People may have to pay this charge if they have income over £50,000 and either they or their partner receive Child Benefit.
- Claiming for personal expenditure and business entertaining: For those running a business, don't forget that while business entertaining of clients is not tax deductible, entertaining your employees is allowed.
- Omitting a source of income: You must include all sources of income, including interest on a bank account.
- Failing to register for self assessment at all: Many people don’t realise that they need to submit a tax return, so they fail to register in time. You must send a tax return if from 6 April 2018 to 6 April 2019 you were, for example:
a. Self-employed as a sole trader and earned more than £1,000
b. A partner in a business partnership
c. You have income from renting out a property
d. You have income from savings investments or dividends.
Caroline Miskin, ICAEW Technical Manager for Practitioner Support, said:
“These are real mistakes our members have seen people make, which they have been able to help fix.
“The best way to ensure your tax return is correct is to consult an accountant before you submit it, so they can point out any errors or essential items which may be missing.
“Making mistakes can lead to fines. There’s still time to get help before the deadline at the end of the month, but you must act now.”
Anyone who wants to register should contact HMRC now or go online and search for form SA1.
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