5th January 2021Less than a month to go until self-assessment – avoid these common mistakes!
On the 5th of January 2021, HMRC confirmed 55% of Self-Assessment customers have already filed their return. We are urging those who still haven’t completed to do so by 31 January.
Our Head of Private Client, Jamie Morrison explains: “Anyone who earns over £100,000, has become self-employed, received high levels of investment income, or has capital gains tax to pay must complete a self-assessment return. The deadline is a Sunday this year – find all the relevant paperwork during the week and allow time to speak to HMRC or your accountant if you need to!”
Confused about whether you need to file?
Self-employment continues to rise. However, it’s not just the self-employed who have to complete their self-assessment tax returns, so it is worth double checking if you’re unsure.
You must submit a tax return if you have self-employed earnings or have received untaxed income over £1,000. You will also have to file if you have generated income from renting out a property, including through Airbnb.
Avoid these common mistakes
- Allow plenty of time. Gathering paperwork takes longer than you think! This includes your P60 which will confirm the total tax you have paid on your income. You will also need a record of benefits and expenses which can be found on your P11D or P9D forms. If you have left a job in the last tax year, you will also need a P45 from your previous employer.
- The deadline is a Sunday. Allow time to speak to an adviser if you need, the deadline is a weekend this year which can make it harder
- You can claim tax relief on pension contributions. Make sure you keep details of any pension contributions made to allow you to claim the right tax relief for them.
- Make sure you include charity gift aid payments. You will also need details of all your gift aid payments – e.g, have you sponsored a friend to run for charity? This can be included as HMRC provides some tax relief on charitable giving.
- Don’t forget to make a copy of your completed tax return and keep a proof of postage, on file. If you are employed or a pensioner, please keep all paperwork for 22 months from the end of the tax year to which it relates to. If you are self-employed or letting a property, you should keep all paperwork for 5 years and 10 months.
- Remember your personal savings allowance. Don’t forget that this can be applied to interest earned on your savings. You could receive up to £5,000 in interest on savings tax-free.
If you miss the 31st January deadline, you will be fined £100 for a late return. You’ll have to pay more if it’s later, and you’ll be charged interest on late payments.
This list is by no means exhaustive; if you aren’t sure whether you need to complete a tax return, please seek professional advice from one of our team or contact HMRC directly.