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As we draw closer to the submission deadline of 2021-22, HMRC has issued a warning to over 5 million of their customers to complete their tax returns with just a few weeks left or potentially face a fixed fine of £100 by January 31, 2023. 

With this warning in mind, most taxpayers unwittingly make mistakes when completing their tax returns due to no tax knowledge and their unwillingness to seek professional help.

Firstly, most people completely forget about the deadline of 31 January 2023 despite various campaigns and so leave things to the last minute. All self-employed people must submit an annual return, as do all limited company directors.

Secondly, tax reliefs and allowances are available to reduce tax bills that people are unaware of or usually forget due to the rush in completing their tax returns. Some of these reliefs are Private Pension Contribution, Donations, Use of home, business mileage claims, etc.

Thirdly, people make mistakes in declaring all income/capital gains earned during the year. HMRC are strict on this type of omission and there are usually severe penalties for failing to declare all relevant income and capital gains. The penalties range from 0% to 100% depending on if the omission is deliberate or non-deliberate. In the avoidance of doubt, these are listed below:

  • Income from employment
  • Benefits include 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

In addition, the common mistake made is people trying to claim expenses that they are not entitled to claim. You can legitimately claim many allowable expenses to reduce your tax bill. Allowable expenses are essential business costs that are required to keep your business up and running. They are tax-deductible, which means HMRC allows you to offset those expenses against your annual tax bill.

Examples of allowable expenses you can claim are:

  • office costs – office, property, equipment, stationery
  • travel costs – car, van, fuel, parking, train or bus fares
  • clothing expenses – protective clothing, uniforms
  • staff costs – salaries, bonuses, pensions, or subcontractor costs
  • financial costs – accountancy costs, insurance, bank charges
  • costs of your business premises – rent, rates, utility bills, business rates
  • advertising or marketing – entertainment, subscriptions, website costs
  • training courses – related to your business

There are complex rules governing most of these expenses, claims and reliefs. An incorrect claim could result in costly penalties for incorrect claims.  

Furthermore, another mistake is forgetting about Payment on Accounts. According to HMRC, Payment on accounts is an advance payment towards your next tax bills which is mandatory for less than £1,000 in your last tax bill. 

Also, some people are not aware of the High-Income Child Benefit tax charge which affect people or their partner who earns more than £50,000 per year still in receipt of child benefit. There are over 7.2 million UK families affected by this charge rule. It is the taxpayers’ responsibility to deal with this charge through their tax returns. I always advise my clients to discontinue such benefits when they are high earners during to year to avoid such hassle.

To circumvent these mistakes, I advise seeking professional help in completing your self-assessment tax return before the deadline. Please contact me on 01224 635616 or clients@bergenassociates.co.uk  


Olamide Soyombo
Client Manager
Bergen Associates

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