5 common tax return mistakes to avoid
Filing your tax return last minute? We look at five common tax return mistakes to avoid before the 31 January tax return deadline.
Last Updated: 21 August 2023
The deadline to complete your online return is 31 January 2024. If you've left it late to submit yours, here are five common mistakes to make sure you avoid.
This isn't personal advice. We are not tax experts and tax is a complicated subject, so if you're not sure what's best for you, you should seek professional advice. Tax rules can change, and any benefits depend on your circumstances.
1. Misplacing your unique taxpayer reference (UTR) number
Your UTR number should've been sent to you when you registered for self-assessment or set up a limited company. You'll need it to complete your tax return.
If you've misplaced it, don't panic. You should be able to find it on previous tax returns or in your Personal Tax Account if you're registered for Self-Assessment. It's a ten-digit number and can also be called a tax reference number.
TIP: If you still can't find it, try contacting HMRC's Self-Assessment helpline to request it.
2. Giving up if you don't have all the paperwork
It can be easy to lose heart if you've not yet got all the paperwork you need. But don't give up.
To avoid paying a fine, you can submit an estimated tax return and update it later on when the paperwork arrives. You can normally make changes to your tax return for up to a year after the filing deadline.
3. Getting your sums wrong
Getting a figure wrong here or there might not seem like a big deal, but it's important not to be careless.
HMRC can issue penalties in cases of careless or deliberate mistakes, but they won't normally issue a penalty where 'reasonable care' has been taken.
TIP: The online form will do some of the calculations for you, but make sure you double check your figures. You could even think about asking a professional, like an accountant, if you're not confident.
4. Not taking the opportunity to 'make it easier' next year
If you're nearly done with your return, it's tempting to try and forget about it until the same time next year. Instead, now's the time to make changes so things are a little less stressful next time.
If you hold investments, it's worth thinking about putting them in an ISA. As well as possibly cutting your tax bill, it could make life simpler. Once they're in an ISA, you don't have to worry about declaring UK income or capital gains on them.
Pensions are designed to help you save for retirement and paying into one now could also help reduce your tax bill for 2023/24. Your tax return is for the last tax year, 6 April 2022 to 5 April 2023. If you pay tax at a higher rate, making a pension contribution by 5 April could reduce this tax year's (2023/24) bill.
Pension and tax rules can change, and any benefits depend on your circumstances. You won't normally be able to access money paid into your pension until the age of 55 (57 from 2028). If you're not sure if a course of action is right for you, ask for financial advice.
More on pensions for the self-employed
To make next year's tax return easier, you could even think about bringing all your savings, pensions and investments together under one roof. Just make sure you're not paying excessive exit fees or giving up any valuable guarantees in the process.
Having everything in one place simplifies things. There will be less paperwork to juggle, and it could make it easier to spot tax-saving opportunities. You'll easily be able to see what allowances you've used, and how much you can still pay into any tax efficient accounts like an ISA or pension.
Remember, all investments can go down as well as up in value, so you could get back less than you put in.
MORE ON CONSOLIDATING INVESTMENTS
5. Not declaring pension payments
Remember to include details of any pension contributions you made in the 2022/23 tax year on your tax return. Again, it's important to get these figures correct. Make sure you put the value you've paid in, plus the basic-rate tax relief of 20% from the government. This is also known as the gross value.
If you pay tax at a higher rate than the basic rate, it could make a big difference in reducing your tax bill. If you're a Scottish taxpayer, please note different tax rates and bands apply.
