With Self Assessment season in full swing we give you the commonest mistakes made.

1. Failing to include income where tax has been deducted at source.  It is a common misconception that employment income does not need to be included on Self Assessment because ‘the tax has already been paid’.  Since the tax system uses a system of income thresholds, all income needs to get included on Self Assessment whether or not tax has already been deducted.

This sometimes also comes up with interest income and pension income.

2. Recording net employment income (income after tax) rather than recording gross income (income before tax) and tax deducted.  Again because the tax system deals in thresholds which are based on gross income, we need to record gross income and then show the tax deducted.

3. Forgetting income altogether.  Many of us are focused on a main source of income and it is easy to forget that we may have other income in the year.  Income to include in Self Assessment includes:

  • Income from employment
  • Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance,
  • Pension income
  • Interest, dividends from savings, bank accounts, building societies investments or Trusts etc.
  • Property income
  • Foreign income including evidence of tax already paid abroad
  • Capital gains
  • Employee share schemes
  • Dividends

4.  Including expenses against income that cannot be claimed. Problem areas tend to revolve around expenditure that might be seen as part of everyday living expenses but could be seen as business expenses – areas such as household expenses when working from home, travel, car, food and drink, entertaining, research.

The rules on some of these are so complex and varied, we would recommend getting expert advice.  However the general principle is that expenses need to be ‘wholly and exclusively’ for business purposes.

5. Forgetting to include Pension Contributions or Gift Aid which relieve tax for higher rate earners.  Whilst the taxman will not penalise you for overpaying tax, it is easy to forget to include these tax releifs on your Self Assessment.

6. Forgetting that payment is due by 31st Jan.  Not only is the tax return due by 31st Jan but payment also.  Depending on how you pay you may need to leave a few days for funds to clear also.