With penalties for failing to submit on time and additional interest if income is undeclared, taxpayers facing the January deadline for self assessment tax returns will have been heading into the festive period facing the extra burden of ensuring their tax return is correct.

Look at the basics first. It is essential that anyone who needs to complete a tax return for income received during the 2018/19 tax year is registered for self assessment with HMRC.

Before anyone can submit a tax return, they have to register with HMRC and receive a unique taxpayer reference (UTR).

Additionally, if they want to file a tax return online, taxpayers must register for online self assessment and receive an activation code for your online account.

HMRC sends this information by post and it takes around 10 working days, longer at times, so time is of the essence.

While HMRC accepts that there will be circumstances where a taxpayer cannot file their tax return on time, avoidable errors caused by disorganisation or just not realising this needed to be done will not be accepted as a reasonable excuse.

Taxpayers can register for self assessment and set up their online account through the Government Gateway website.

Incomplete information

Once registered, incomplete or inaccurate information is often the downfall for many taxpayers. Taxpayers must ensure that they have recorded all forms of income received so that their tax bill is calculated correctly.

When thinking of income, most taxpayers will either focus on their self-employment income or the income they received from an employer, forgetting other forms of income like rental income, capital gains, share dividends, savings interest and foreign income.

Often overlooked are taxable benefits, such as statutory maternity pay, statutory sick pay and Jobseekers Allowance. If you received any taxable benefits during the 2018/19 tax year, they also have to be included in your income.

Where possible, all figures in a self assessment tax return should be actual, not estimated, figures. Any estimates used should be clearly marked as such and amended for actual figures as soon as available.

Another common mistake is omitting key expenses or failing to claim all available tax relief.

Sole traders and small business partnerships need to make sure that they are claiming the tax relief on all their allowable expenses through their tax return, whether relating to essential equipment for the running of their business, mileage expenses or the costs involved in using one’s home as an office or workshop.

But not all self assessment taxpayers are self-employed; they could be a high rate taxpayer or claiming more than £2,500 in expenses.

In these instances, they will not be entitled to claim as wide a range of allowable expenses as someone who is self-employed, but they should not forget key areas such as charitable donations.

Taxpayers should ensure that they retain good, accurate records of their outgoings and expenses in order to satisfy HMRC’s requirements.

Deadlines

Failing to meet the deadline is a common mistake, with nearly three quarters of a million taxpayers facing a penalty after the 2017/18 deadline.

Not only does the self assessment tax return need to be submitted by midnight on 31 January 2020, taxpayers also need to make sure they have settled their tax bill by that deadline as well as made the first payment on account for the current tax year, if this applies to them.

With a penalty of £100 for missing the deadline by just a day and interest mounting up on unpaid tax, it could be a costly mistake.

Finally, keep an eye out for small mistakes which can have large costs.

Each year, some taxpayers make silly little mistakes like forgetting to actually submit their tax return, even though they have completed it, or getting their UTR and national insurance numbers wrong.

These can all have much bigger consequences, such as penalties and fines for unpaid taxes.

Just taking five to 10 minutes once the return is completed it to make sure personal details are correct, that income or expenses figures have not been mistyped, is invaluable, as is making sure that it has actually been submitted and that there is an acknowledgement to show that is the case.

About the author

David Redfern is CEO of DSR Tax Claims Ltd