Top 20 Tax Filing Mistakes to Avoid
As promised last week, here is Part 2 of our blog which aims to to explore the common (and avoidable) mistakes made by UK tax payers.
TAX MISTAKESTAX COMPLIANCEHMRCSELF ASSESSMENT
Are you ready to take control of your taxes and avoid costly errors? In the second part of our blog series on common tax mistakes, we’re diving into more pitfalls that can derail your tax filing process.
Whether you're a self-employed freelancer, a landlord, or a high earner, these avoidable mistakes can lead to unnecessary stress, wasted time, and potential financial losses.
By understanding and sidestepping these errors, you can ensure a smoother and financially efficient tax filing experience. Given our extensive experience with Capital Gains Tax, it seems fitting that we begin with point 11...
11) Not Declaring Capital Gains
Failing to report capital gains from the sale of assets (e.g., property or shares) can be a common oversight. Many people don’t realise they must report gains that exceed the annual tax-free allowance.
12) Incorrect Use of Tax Code
Using the wrong tax code can result in underpaying or overpaying tax, especially for individuals with multiple jobs or sources of income. It’s important to regularly check your tax code and notify HMRC of any changes in your circumstances.
13) Not Considering the High-Income Child Benefit Charge
Taxpayers who earn more than £50,000 and receive child benefit often fail to account for the High-Income Child Benefit Charge, which requires them to repay some or all of the benefit through their tax return.
14) Incorrect Treatment of Student Loan Repayments
Self-assessment taxpayers who have student loans often make mistakes by not including the required repayment amounts on their tax return or choosing the wrong repayment plan.
15) Not Reporting Cryptocurrency Gains
With the rise of cryptocurrency, many taxpayers are unaware that profits made from buying and selling digital assets like Bitcoin are subject to capital gains tax and must be reported to HMRC.
16) Not Accounting for Rental Income Tax Properly
Landlords often make mistakes with rental income taxes by either underestimating their taxable income or incorrectly claiming expenses like mortgage interest under new rules.
17) Forgetting to Carry Forward Losses
Businesses or individuals who have experienced losses often forget that they can carry these forward to offset future profits and reduce tax liabilities in subsequent years.
18) Not Considering Inheritance Tax
People sometimes forget to plan for or account for inheritance tax (IHT) liabilities, especially when receiving gifts or large inheritances. Failing to consider IHT thresholds and exemptions can lead to costly surprises.
19) Incorrectly Claiming Employment-Related Deductions
Employees may incorrectly claim work-related expenses for things like travel, uniforms, or equipment that aren’t fully eligible under HMRC rules.
20) Misinterpreting Overseas Taxation Rules
UK residents with overseas income or investments often make mistakes in understanding how double taxation agreements work or fail to declare income from abroad, thinking it’s not taxable in the UK.
Final Thoughts
Navigating the complexities of tax reporting can be overwhelming, and even a small mistake could lead to significant consequences. While it might be tempting to go it alone, the intricacies of tax laws often require expert insight to ensure everything is handled correctly.
By seeking professional help, you not only save yourself from the headache of second-guessing your tax decisions but also potentially save money by avoiding costly errors. At The Tax Faculty, our experienced team is here to guide you through every step, offering bespoke advice tailored to your unique situation. Let us handle the complexities so you can focus on what matters most—your financial well-being.
Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023
The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.
Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.
Read more about Charles and the award here.
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