Ten Common Tax Return Mistakes
HMRC have made it quite easy to file your own tax return, which I think is great because some people just can't afford accountancy fees but their clever software isn't capable of pointing out these common tax return mistakes. Making some of these errors could cost you a great deal more than the fee you saved.
1. Not declaring rental income at all, incorrectly or not declaring it in the ownership ratio. HMRC are cracking down on rental income and are using outside sources to find out who may have rental income that they are not declaring. If you receive rental income from any kind of property, including land, your own home or an overseas holiday home you must declare this to HMRC. If the property makes a loss or has minimal profits, then HMRC may decide that they do not need you to complete a tax return. If you jointly own a property with your spouse or civil partner then both need to declare 50% of the income unless you have made an official election with HMRC to change the ratio. You should not just assign the income to the spouse who completes a tax return or the lower earning spouse. This is a very complex area and you should get professional advice.
2. As above, if you have joint investment or savings accounts these also need to be declared 50:50 and cannot be assigned to the lower earning spouse.
3. Not claiming for using your home as an office if you are self-employed (or employed). There is a standard amount that you can claim (details on the HMRC website) however there is a much more generous claim that you can make. Speak to your accountant to get help in this area.
4. Not claiming employment expenses. Employees are entitled to claim for employment related expenses. There are very specific rules and you need to careful of expenses that are excluded. You also need to declare if your employer has made a contribution to these expenses.
5. Not including any benefits in kind items on your tax return. The P11D is usually the last piece of tax information to be received by clients and usually arrives in late May/June time. This means it frequently gets omitted from the tax return. You will receive a P11D if your employer gives you certain “perks” like a company car or healthcare.
6. If you left employment part way through the year, make sure that you don’t forget to enter the P45 and P11D details from the employment onto your tax return.
7. Not claiming for gift aid. If you make any charity donations , including entry into some attractions such as National Trust gardens and zoo’s. This is very important for anyone who pays tax at a higher rate or has an age allowance.
8. Not declaring a business or capital loss. You still need to declare a loss and a good accountant will probably be able to utilise the loss and get you some tax back.
9. Not declaring chargeable events, such as disposal of shares or life assurance policies. The investment/life company will issue a chargeable event certificate and this should be entered onto your tax return.
10. Finally, and this is a big one, if you have a rental property or you claim for using your home as office you should not declare the full mortgage repayments (unless you have an interest only mortgage). This is a very costly mistake that is quite common. If you think you may have been using the wrong figures on your tax returns I can help you rectify this—before you declare the mistake to HMRC.
If you think you may have made some of these mistakes or you need any help with your tax return, give us a call or send us an email.