As countless Brits scramble to file and pay their tax returns before the looming deadline, chartered finance expert Tom Drury from The Investors Centre has cautioned that many might be inadvertently making significant blunders that could hit their wallets hard, and not just due to fines for lateness.
He advised: “Many mistakes can be easily avoided with a little preparation and attention to detail.”
Drury pinpointed the top six frequent mistakes people commit on their tax returns and offered solutions to rectify them before the tax deadline this Friday, January 31. The first key error is failing to claim all eligible expenses.
He explained: “While trying to get your return done as quickly as you can, you might overlook allowable expenses and deductions, meaning you’re paying more tax than you need to be.
“From office costs like phone bills and stationery, to staff salaries, or a portion of costs like heating and electricity if you work from home, allowable expenses can be deducted to work out what your taxable profit is.” However, he also cautioned against claiming incorrect expenses, particularly when business and personal expenses are mixed.
For instance, if one phone is used for both business and personal calls, you cannot claim the entire phone bill because it wasn’t used exclusively for business purposes.
One of the simplest methods to make sure your tax return is accurate is by maintaining “meticulous records of your financial transactions throughout the year”.
The specialist advised to begin this practice “as soon as you decide to become self-employed” but those who may not have been quite as orderly, he suggested: “You can submit an estimate. Just make sure to send any corrections within 12 months of the self-assessment deadline so your bill can be adjusted. You will either pay more tax or be able to claim a refund.”
Tom cautioned one of the biggest mistakes with a simple fix is not double-checking before pressing send on your return: “A spelling mistake there, a mistyped figure here. It’s important to be accurate, and double-check all information before submitting, otherwise you’ll end up paying too much, or not paying nearly enough and be faced with a hefty bill later down the line, just because of a small error.”
As the deadline looms, with just under five days left, the expert reminded urged people not to procrastinate their tax returns until the eleventh hour. He warned that it can “take longer than you think, especially if you realise a little too late that you’re missing important information”.
Instead, he encouraged individuals to begin their return process well in advance to avoid missing the deadline entirely, which incurs a hefty £100 penalty from February 1. If your return hasn’t been submitted and paid three months later, additional penalties will start accruing daily, along with interest on your outstanding taxes.
HMRC’s self-assessment deadline is January 31, marking the date every liable Brit needs to have filed and paid their taxes. Those who need to pay these dues typically earn an income that isn’t automatically taxed, such as self-employed individuals, those earning rental income, and even side hustlers earning over a certain amount.
