10 common Self Assessment errors (and how to avoid them)

The Self Assessment deadline might feel like a long way off, but in reality there’s never been a better time to get your tax return sorted. This applies even more if you’re a contractor juggling multiple income streams, expenses and deadlines.

At Liquid Friday, we’ve seen time and again how simple mistakes can lead to costly penalties, stress and delays. But the good news is that very one of these mistakes is avoidable, and we’re here to help you steer clear of them. 

Let’s look at the common Self Assessment errors and how our Self Assessment service can save you time, hassle and money.

1. Missing the deadline

It sounds obvious, but you’d be surprised how many people leave their tax return until the last minute, or worse, miss the 31st January deadline altogether. According to HMRC figures, last year 1.1 million taxpayers did! Even a single day late means an automatic £100 fine with additional penalties and interest for late payment.

2. Not registering with HMRC

If you are new to CIS contracting or self-employment, you need to register for Self Assessment before you can file a tax return. If you haven’t done this by 5th October, you risk a fine and won’t be able to submit your return correctly.

3. Wrong or missing UTR number

Your Unique Taxpayer Reference is essential when submitting your return. Entering it incorrectly, or forgetting to include it, can cause delays and even invalidate your submission. Can’t find your UTR? Read our blog for what to do 

4. Underestimating income

Another common mistake is to forget to include “incidental income”. That includes things like bank interest, dividends or income from side projects. Unfortunately HMRC won’t let it go. 

5. Overclaiming or misreporting expenses

It’s tempting to claim every expense you can, but unless they’re wholly and exclusively for business purposes, you could land yourself in hot water. Likewise, if some legitimate expenses slip your mind, you’re paying more tax than necessary. 

6. Not declaring previous or other income

Even if you’ve been a PAYE employee for part of the tax year, this still needs to be included in your Self Assessment. Omitting it could raise red flags with HMRC. 

7. Not keeping proper records

It is worth remembering that you’re required to keep supporting documents for at least 5 years. Failure to do so can lead to penalties, even if your original submission was correct.

8. Guessing figures

“Rough estimates” are risky and often inaccurate. HMRC expects precise, provable numbers. Guesswork could lead to an investigation or penalties.  

9. Banking on payment plans too late

If you know you’ll struggle to pay your tax bill, you might be able to set up a Time to Pay arrangement with HMRC, but only before the payment becomes overdue. 

10. Going it alone

Self Assessment can be complex, especially if you are a contractor. Every tax year is different and your circumstances and income streams change. Using a professional means you tax return is done right, first time. 

PAYE Umbrella Employees

If you are paid PAYE umbrella, you should only have to do a Self Assessment if you are a high earner or have additional income which isn’t taxed. If you are unsure, click here for further information. 

Leave it to us!

Why risk falling foul of these common mistakes with Self Assessment?  Let Liquid Friday handle it for you. Click here to get started.