5 Mistakes That Can Sink Your Self Assessment Tax Return
Remaining at the top of your game as an independent professional takes a lot of foresight and adjustment. Many of them come in the form of your Self Assessment tax form. What you declare, and how you declare it, will reinforce the financial health of your earning model.
Trust us – slip-ups, oversights and bad information will get the taxman on your back, when all you want is to carrying on doing great work. Since there’s a Self Assessment deadline due for the 31st January, we want to clarify five small (but crucial) accidents to avoid on your tax return.
1. Not declaring every form of income
Freelancers and contractors can juggle multiple income streams; that’s obviously going to happen when you’re dealing with several clients at a time. Yet there’s more to consider, such as inheritance money, rental yields, life insurance and pension pay-outs. HMRC needs to be aware of it. In essence, treat all the income you receive as taxable, even when it’s not your main form of revenue.
2. Using the wrong ID
We think we know our National Insurance number off by heart, but don’t rush when you write it down – a mistake could be flagged up and undermine your tax return’s credibility. Similarly, check you have the right tax code, because there are manifold points to identify you. Marriage Allowances, Scottish pension rates and basic-rate tax statuses are just some of the labels that HMRC expect you to note down.
3. Failing to make accurate calculations
This is a major issue for freelancing professionals, because there’s so much to rope together in terms of showing you’ve earned X amount. To complicate matters further, the government’s tax calculator doesn’t always respond as well it could to the intricacies of your earning model. When you look over dates, invoices and bank statements, some evidence may be missing… And even a small, mistaken sum can destabilise the Self Assessment. Hire an accountancy service like us to get it right first, every time.
4. Going overboard with expense claims
Freelancers and contractors are granted expense allowances, like any self-employed worker. There are, however, limits on what can and can’t be claimed. Although you may think you know the guidelines, a ‘client meal’ or ‘second PC monitor’ probably isn’t deemed essential by HMRC. Some Self Assessments try to stretch the rules too far. But in all likelihood, bad claims will be caught out, and you may be penalised if they’re quite extensive.
5. Forgetting to confirm your accountant is filing it
Support packages from Bright Ideas are tooled for the modern self-employed worker. We can complete and assess a Self Assessment on your behalf, as long as you’ve signed a 64-8 form, which gives us the authority to submit it. Plenty of freelancers and contractors are caught out by this every year. It’s a critical, oft-ignored part of the process, and it should be completed/returned in advance of us making the Self Assessment return.
Now you’re aware of what not to do, there’s a clear route forward, free of the blunders that bog other people down for January 31st. Call us for an expert eye on your Self Assessment tax return today.
You may also be interested in…
November 23, 2022
November 17, 2022
November 1, 2022